In the latest edition of Trend that has been published last week, our colleague and expert Jan Bocko informs about the importance of a good reporting system.

Quality Information from Business Systems – a Necessary Evil or a Question of Survival?

The growth of our economy comes hand in hand with stronger competition in every sector. Companies frequently face negotiations with their customers about the prices of their products and at the same time with their suppliers about input prices. This battle for competitiveness particularly affects small and medium-sized enterprises, where the owners do not have the resources to finance regular investments and thereby reduce their production costs. They have to find reserves and savings in every department – in purchasing, production or the administration of the company as a whole.

Answers needed by the owners

The times when owners of small businesses knew about every individual invoice and could get by with simple cash-flow accounting on the basis of outgoing and incoming invoices and the payments on their operating loans are long gone. Nowadays, the owners and managers of these companies face more difficult questions brought by strong competition. They need answers to questions like: “What is the profitability of my products or product groups? Which customer brings me the greatest margin? How does my cost structure compare to the competition? Can I prepare a realistic price calculation for my products?” These are just some of the examples of requests which we, as consultants, hear more and more often from our clients and the managers of their companies.

Complex information

With the increasing complexity of requests, the information base available to this sector has to change too. Company accounting and warehousing systems have to be adapted or upgraded to meet the need for detailed monitoring and classification of costs into products, activities or production centres (workshops). The responsible employees have to understand that this information is important for the decision-making process and is not just extra bureaucracy.

It is only by accurately assigning direct production costs to products and customers and by systematically allocating overheads (production, marketing, administration) using allocation keys or drivers that it is possible to answer the questions that are being asked today.

Information is power. It was true in the past and it’s true today. Without regular high-quality information from the company systems it is only possible to run a company “by feel”, which isn’t enough these days.