Profitability control

Use a forecast budget and integrate management accounting concepts, such as calculating cost price.

1. Budget forecasting:

- Needs analysis: Identify the organization's financial needs for the coming year based on strategic objectives, current projects, and revenue and expense forecasts.

- Data collection: Gather the organization's historical data (sales, costs, operating expenses, etc.) to establish realistic forecasts.

- Budget forecasting: Create a document detailing expected revenues and expenses for the coming period, with allowances for contingencies.

2. Training teams in management accounting:

- Organization of training sessions: Set up training sessions for the team members concerned, in order to familiarize them with management accounting concepts, including the calculation of cost price.

- Provision of tools: Distribute guides or specific software to help apply management accounting principles in the context of the budget forecast.

3. Implementation of costing:

- Identification of direct and indirect costs: Determine all costs associated with the production of goods or services, including direct costs (raw materials, labor) and indirect costs (overheads).

- Costing: Use the data collected to calculate the cost price of each product or service, integrating all relevant costs.

- Margin analysis: Compare the cost price with the selling prices to ensure that profit margins are adequate.

4. Integration into the management process:

- Regular monitoring: Set up a regular monitoring system to compare actual results with the forecast budget and adjust forecasts accordingly.

- Real-time adjustment: Adapt the budget and cost prices according to the gaps observed between forecasts and actual results.

5. Reporting and Review:

- Periodic Reporting: Prepare regular financial reports to inform management of performance against budget and necessary adjustments.

- Budget Review: Mid-term, revise the forecast budget to take into account market developments, costs, and new data available.

6. Communicating Results:

- Sharing with Stakeholders: Communicate the results of budget monitoring and costing with internal stakeholders (management, finance teams) for informed decision-making.

- Feedback: Collect feedback from teams to improve the budgeting and costing process for future periods.