Samara Lima e Andrade
Captain Intendant
Head of the Production Division of the Pirassununga Aircraft Farm
This case study aims to present how the Pirassununga Aeronautical Farm (FAYS), a Military Organization based at the Air Force Academy (AFA), employed cost analysis as a beacon for the optimization of management and public spending. The entire project aimed to meet the organizational demand of maturing public management and had as its scope the knowledge of the historical unit cost of assets produced in the fiscal year 2019. The analysis used the ABC (Activity Based Costing) method to prepare the report and sought to serve as a subsidy to assist management in making more assertive decisions to improve public spending.
Founded in 1942, FAYS has an area of 6,502 hectares in the State of São Paulo. It is a Military Organization of the Brazilian Air Force, whose mission is the productive occupation of the lands of the Pirassununga Air Force Garrison with agricultural activities, which result in the production of food products sold internally and externally to the organization, according to the Strategic Planning in force.
Public opinion has become increasingly demanding as to the efficiency of public management and the optimization and improvement of public spending, culminating in the strengthening of the cost culture as a promising solution to achieve these goals. In this context, to meet the organizational demand for knowledge of the historical unit cost of assets produced by the Treasury, FAYS has engaged in a survey of the costs of processes and macro-processes developed within the OM, studying the possibilities of tracking indirect costs, to produce useful information to assist management.
The first decision to be made for the preparation of the report was what will be the focus of the cost accumulation system, considering that it can occur either by project or by activity. Project costs must be accumulated by order, and are those related to the provision of services or production of goods linked to specific projects, with scheduled start and end dates; whereas activity costs must be accumulated by process, and refer to activities of a typical nature, which occur continuously. In the case of the FAYS project, the accumulation system by process was applied, setting as the analysis scope date of the Plant Production Unit the period from 06/01/2018 to 05/31/2019 and as the scope date of the Animal and Industrial Production Unit the period from 01/01/2019 to 12/31/2019.
Considering that, unlike the legal practices in the private sector, the choice of the public sector costing method is not restrictive, it was necessary to choose which costing method would be used in the analysis. Taking into consideration that previous FAYS projects have already used the Activity Based Costing method, the ABC method was the most favorable for the execution of this project.
With the costing method defined, the organizational structure of FAYS was analyzed and it was established that the work would be dedicated to the analysis of the primary processes of the entire organization, these being considered those essential for the fulfillment of the institutional mission, i.e., the processes that relate directly to the farm’s production complex, which is divided into three Production Units: Plant, Animal and Industrial. Along with these three units, the commercial aspect of the mission, which is the distribution of goods produced or processed on the farm, makes commercial activities also included under the list of primary processes. For the other non-primary processes, such as personnel management and infrastructure activities, the costs were registered as expenses.
Under the optics of this approach, it became essential, to ensure the continuity of the engagement in the Cost Accounting area with the desired fluidity, the acquisition of a software that could optimize the work required for the project. In this search, a temporary license of the MyABCM software was hired.
As recommended by the Cost Information Manual of the Federal Government (MIC), it is from the development of their own modeling that organizations begin to advance in the cost culture. In this sense, to optimize the analyses and understand the logic of the calculations to be performed, it became necessary to elaborate cost flowcharts (with cost sub-centers) that reflected the interrelationship between the activities that comprised the processes of the FAYS Productive Complex in the referenced scope.
Once the Cost Sub-Centers that reflect the consumption of resources by activities were known and their interrelation understood, it became necessary to calculate the monetary values cumulatively spent in the processes to calculate the unit cost of the objects of interest.
Therefore, the following order of priority was considered for the allocation of costs to the activities and objects of interest: direct allocation (when there is an objective identification of the sacrifice of resources for the development of an activity or an activity for the delivery of a product); tracing (when a cause and effect relationship is sought through the use of drivers); and apportionment (a more arbitrary criterion that should be avoided from the management point of view).
After completing the preliminary steps, the desired result was obtained by processing the application itself. This has the parameter of calculating the Unit Cost by dividing the costs that were accumulated in the allocations, by the “Volume Entered” of each verification object, i.e., by the total quantity of units produced during the period considered.
In this context, to optimize the managerial analyses, “triggers” were created along the cost modeling to enable a certain roll of results based on the same input. Thus, it was decided to name the different compositions to improve the understanding of the coming analyses, which are Basic Cost, Budgeted Cost, Production Cost and Cost Price.
Basic Cost:
Comprised of the consumption of materials used in production, and the settlement of services applied in production activities.
Budgeted Cost:
Comprised by the consumption of materials used in production; the settlement of services applied in productive activities; and the depreciation of permanent assets allocated to productive sectors in the asset controls of SILOMS (Integrated System of Logistics of Material and Services).
Production Cost:
Composed by the consumption of materials used in production; the settlement of services used in productive activities; the depreciation of permanent material allocated to productive sectors in SILOMS; and the labor allocated in productive sectors in SIGPES (Personnel Management Information System).
Its main application is the optimization of the Organization’s horizontal vision, providing an opportunity for process analysis and improvement, using activity performance improvement, and it can also be used as a benchmark for pricing items intended for external sale and the Reimbursable Section.
Cost Price:
Composed of the consumption of materials used in production; the settlement of services applied in production activities; the depreciation of permanent material allocated to productive sectors in the asset controls of SILOMS; the military manpower allocated to productive sectors in SIGPES; and the commercialization expenses.
With this in mind, in addition to guiding public pricing, the valuation of production stocks, the retro-analysis of operational practices employed in the production chain, the promotion of improved performance by managers through benchmarking actions, product reengineering, waste reduction, as well as the feasibility of changes to the current portfolio, the practice of measuring unit costs of goods produced by the Treasury can certainly be employed as a continuous improvement tool for the organization.
From the theoretical approach and the analysis of the results obtained through the implementation of a cost management model using the ABC methodology, it is expected that the proposed objective has been achieved and it is suggested that FAYS continues to pursue continuous improvement in terms of Cost Accounting, focusing on the goals of quality public spending.
After several public and private investments directed to the waterway sector, the ports have increased their activities regarding the displacement of products and services in recent years. According to Statista data, world seaborne trade has been growing in volume since 1990. Between 1990 and 2020, the volume of cargo transported by ships has more than doubled, from 4 to nearly 10.7 billion tons.
However, this intensification of activities in the sector makes a challenge evident: the ports still lack skilled and instrumented leaders to develop good port management and logistics.
For this reason, the results obtained end up being lower than expected, even in an optimistic scenario. In this context, it is essential for companies in the segment to develop actions to improve their management, to provide the extraction of the best possible results.
And this is exactly the theme of our article today. Read on to understand the importance of technology in port management!
Maritime transport was the first mode of international trade on a global scale. With hundreds of years of history, port management techniques have evolved as new naval and communication technologies have developed.
However, factors associated with the intensification of trade and the leadership of certain nations in the imports and exports of certain products are also determining factors for the establishment of techniques capable of producing the best results. In this scenario, modern port management must rely on systems capable of collecting, managing, and reporting an unprecedented volume of data from the various administrative and operational fronts of the business.
The first step towards more efficient port management is to implement good planning of the organizational processes. In other words, it is necessary to map all the information and operations that are involved in port activities and outline the best strategies and action plans to adapt the business model and prepare the company for constant market transformations.
In this context, it is essential to have well-defined objectives concerning the goals and development plans of the port. This allows efforts to always be directed in the right direction of growth, besides foreseeing potential problems and simulating scenarios to guide decision-making.
And that is where technology comes into play in port management. Having tools that record and automate processes makes the visualization of the history of transactions and operations more efficient, basing the management on real and objective data that help in determining the next steps.
The port challenges are many. Bureaucracy to adapt to government requirements, maintenance and improvement of infrastructure, legal issues specific to the goods transported, implementation of intermodal infrastructure, training and safety of teams, storage of assets, transport logistics, and environmental issues are among some of the most latent problems faced daily.
Recording the actions taken to intervene in each of these areas and understanding how they impact the health of the business is indispensable for port development. And by having specific software and systems to monitor activities, it is possible to optimize the resolution of these and other vital issues.
Firstly, because the technologies allow all the information relevant to port management to be concentrated in a single place. Second, having a system that automates processes and integrates workflows helps reduce the error rate and increase the productivity of the teams.
Another crucial factor is that the implementation of technologies to improve port management is a crucial step toward visualizing how resources are applied. This makes it possible to direct investments to priority areas, enhancing their returns.
In this scenario, one of the most prominent technological solutions is a software specialized in cost and profitability management. They create the basis to make the port more efficient and attract investments and business through the allocation of resources in an intelligent way, capable of propitiating the development of the port.
MyABCM has a solution focused on the port segment that can offer several functionalities to the manager:
Find out about My Ports.
Want to know how a system like this can transform the results of port management? Contact our consultants using the form below.
In case you’ve just stumbled in here, read our full article that explains how the ABC costing method works by clicking here.
Let’s recapitulate some trivial points that underlie “Activity-Based Costing”.
If you are already familiar with the term, let’s go ahead and discuss why ABC (activity-based costing) has the power to increase your profitability.
Let’s get right to the point.
The focus of the ABC method is to have maximum control over the indirect costs (also called overhead) as well as the direct costs associated with a product, service, customer, or channel.
Through a costing system using drivers that respect a cause-and-effect relationship and aiming to bring an advanced analysis of the costs per activity within the operation.
And with this dense range of data, intelligently filter the numbers and transform them into strategic decisions.
The first step comes from what we call “data-driven culture”.
This is the natural habit of ALWAYS making decisions based on collected data and not on a gut feeling.
It all starts by identifying the main KPIs (key performance indicators), which are our key performance indicators.
If you intend to make decisions based on data and not just intuition, yes.
Performance indicators make it possible to measure how much a strategy is generating the expected result or not.
It is important to mention that KPIs are always measurable and concrete.
Analyzing data is something automatic in large companies, however, not always creating strategies and defining next steps is provided by a study on top of what has already been collected and digested.
The ABC costing method is useful for companies that already have this data-driven culture and are looking for optimizations through detailed data analysis.
The more knowledge you have about how much and where your resources are being spent, the more precise your improvements associated with cost management will be.
And that is what we at MyABCM offer.
The ABC method results in an advanced costing analysis based on each activity involved in producing some product, providing some service, or serving some customer or channel.
This is where pricing comes in.
One of the biggest challenges within a business can be made easier by applying the ABC method.
Keep in mind that failing to calculate your total costs can result in sub-optimal pricing, resulting in an unfavorable profit margin for the company.
With all the control of segmented expenses in the palm of your hand, pricing becomes clearer and effectively correct. The consequence of this is the real impact on negotiations with customers, discount policies and commissioning of salespeople, resulting in the end in greater profit for the company!
The option of being able to precisely manage all the organization’s costs. This opens up the possibility of making more assertive decisions about where to act to reduce costs, invest, and even serve the best channels and customers from a profitability standpoint.
2. Associate overhead costs with the products, services, channels, and clients that actually consume it
Instead of associating the same cost to all products, services, customers, and channels, you can allocate the fair value consumed by each.
This also helps identify costs that apply to more than one segment, making this feature more valuable because it potentially eliminates distortions in cost calculations.
3. Evaluate production efficiency and apply improvements
The ABC method makes it possible to assign value to overhead costs by working the data as if it were direct costs. By breaking down overhead costs and assigning them by activity, we can look for breakthroughs with precision.
In the same way, we can make processes more efficient and correctly monitor the key KPIs for each activity in the organization.
4. Accurate data to obtain the desired profit margin
Having accurate data will directly impact a leader’s decision making. It opens up the possibility to reduce or shift production costs and apply effective pricing strategies to obtain an adequate profit margin.
5. Unique Benefits
Other methods cannot cover what the ABC costing method provides.
Directly related to the particularity of activity-based costing, it can measure expenses related to activities, however small they may be.
All the questions below must be answered with a yes.
Then you are prepared.
To be clear, there are not only advantages.
But it is the solution to a number of complex problems for those seeking cost optimization through a robust system.
After you have finished reading this post, you certainly have the clear answers as to how ABC cost management can increase your profits.
To begin, let’s briefly clarify what cost-to-serve is.
Cost-to-serve, widely referred to as CTS, is the sum of all the costs required to provide a product or service to your customer.
The fact that all costs are fully considered is what makes this analysis a high-performance strategy when looking at a customer’s profitability.
We usually associate a good customer with a customer who buys a lot from us – or with the one where we have a significant volume of services and transactions. But this only shows the one where we have had the most sales, not the one where we have made the most money, i.e. the most profitable! A customer with high turnover certainly requires a series of trade-offs and efforts that are often “expensive” to meet.
A study published in the Harvard Business Review showed that on average 20% to 30% of customers are very good from a profitability point of view – bringing between 150% and 300% of the company’s total profitability; on the other hand, between 50% and 60% are neutral (i.e., we do not make or lose money) and approximately 20% are unprofitable.
The big challenge is to understand which ones they are, and in which layer each one is located. Eliminating the clients that we lose money is not enough, as by doing this immediately other clients that are neutral and even those that make some profit start to become unprofitable – after all, our fixed costs don’t disappear, requiring us to make some adjustments in our installed capacity.
Now when we bring into the equation, in addition to the cost of serving each client, the profitability we have with each one and the time we will be serving to this client, we will certainly find situations in which that extremely profitable client will migrate to the competition in the short term; others that are extremely loss-making will continue to drain the organization’s resources. Bad scenario, isn’t it?
The question is, “what should we do?” The first thing to do is to be aware of the need to measure things. As we know, it is impossible to manage what you cannot measure – so measuring and then deciding is key!
“Firing clients”, + the end: those clients who are loss-making often help pay the fixed costs, and if there is no change in the structure of the organization, their “firing” may bring a terrible consequence, which is that clients who are neutral today may start to be unprofitable (and the very profitable ones may become not so profitable). There are companies that have already bankrupted just because of failure in this criterion, and they were excellent “producers”, with well-rounded production lines, equally good product costs, but they neglected this very important detail, which is to understand and act correctly with the costs-to-serve.
During the development phase, it is determined what the cost object is, what the cost of meeting this object will be and how it will be mapped, what the drivers for allocating the aggregate cost will be, and what IT systems will be used to calculate and maintain the analysis of its operation after the development of the customer’s profitability.
On one occasion a large national bank did a project and discovered that it had loss-making clients: What did they do? They eliminated these clients from their portfolio. The result: the clients that were neutral became unprofitable. What did they do then? They eliminated these new unprofitable clients, resulting in a huge loss with this operation. The issue of capacity/idleness must ALWAYS be taken into consideration for cost analysis!
It is also important to know that it is not by firing employees that we reduce costs – at least not indiscriminately. In fact, there are studies that show exactly the opposite: according to the US Conference Board, of the companies that tried to reduce costs, 30% actually had higher costs! Another study by Deloitte showed that 75% of the companies that laid off employees to reduce costs had to rehire others for the same positions within 1 year. And finally, McKinsey showed in a survey that only 10% of cost reduction projects are successful within 3 years of its implementation. Reducing costs is not simple, it demands effort and measurement (measure!) to make the best decisions afterwards.
Check out our content that fully explains the Activity-Based Costing system
The first step is to understand how the organization’s efforts are aimed at serving the various customers and channels; this includes information that must necessarily come from the CRM, but also from interviews with the sales and customer service areas.
Through the metrication of the main activities involved in serving these customers and channels it is possible to understand the effort spent to serve them individually and therefore make specific analyses that allow the understanding of cost and result, customer by customer, channel by channel.
For example: a very common activity of the commercial team is “Meet with Customers”. The cost of this activity is the sum of the commercial area’s efforts (salaries plus salespeople’s benefits and the whole area) including the support areas such as HR (that last month hired 2 new salespeople), the IT area (that this month gave 5 supports related to the new HR system) and also the value of the internal support systems (such as CRM itself); that said, now it’s time to allocate these costs of Meeting with clients – which are not necessarily Product and Service related costs but rather Client related costs (as a periodic maintenance and follow-up activity for these clients); this allocation should be done using the criteria “number of meetings with clients” (assuming that these meetings have an average time approximately equal to each other) or ” meeting hours” if this value varies a lot.
Of course, this allocation must be done taking into consideration the materiality of what is being allocated (that is, many times the effort in collecting and applying this information is not worth it, given the small costs of this activity compared to the other activities of the company) but in many cases it is very well worth it!
This done we have the cost of each customer only with the activity “Meet with Customers” – if we do that with all the activities of the Commercial and Customer Service areas, we will have an interesting suggestion of efforts to be analyzed and surely many surprises will appear, with activities that we never imagined would be so expensive and that would influence so much the costs of each Customer and Channel, and even others that we thought would be expensive, but that in the end turned out to be not very significant.
The set of mapped activities, on one hand their interconnections with the chart of accounts, cost centers, and areas, and on the other hand with the various Products, Services, Clients, and Channels, is called a cost model – and this modeling, if well executed with method and process, allows a vision never before seen in organization!
Access our profitability calculator!
Management in the education sector aims to identify and plan a set of strategies and actions with the purpose of achieving the objectives of the educational institution by using the resources available in the best possible way.
In general, the management in this sector focuses on educational methodologies and practices, using different tools, techniques, and intellectual capital to lead and guide the teams during the execution of the project. For example, the development of the stages is monitored in order to identify the necessary adjustments, ensuring the quality and fulfillment of the activities.
Based on this context, we’ve prepared this post for you to learn about the best management practices in the education sector and put them into practice. Keep reading the article to know more about this topic!
The first step in any management strategy is to start with structuring the project’s plan. Preferably, create a document, for everyone involved, containing guidance on the actions of the school year in question, such as:
The purpose is for managers to make the decision-making process easier. Keep in mind that this planning should undergo a periodic review so that the necessary adjustments and updates of the institution’s demands are carried out.
Promoting a good management in the education sector is a task that can only be carried out assertively if the institution has very well-defined goals. The determination of objectives serves as a parameter for the pedagogical teams and other employees involved, having all the reasons to improve the teaching.
Set goals related to student performance and monitor them to measure aspects such as the student dropout and retention rates and the qualification of teachers. That way, managers will have all the data needed to develop strategies aimed at achieving better results.
Clear and transparent communication between the personnel that make up the educational institution’s team of collaborators is essential for the management in the education sector.
The faculty and other professionals who are part of the daily lives of students should have full knowledge of the goals and objectives to be achieved. Furthermore, feedback exchange between the team is important, so that everyone knows which points they are getting right and which ones they need to improve on.
The use of technology in the education sector has proven to be a real ally, in and out of the classroom. This is due to the advances made by the digital transformation process.
Given the context, to invest in management technology in the education sector is to bring the benefits of automation to the school. In addition to automating manual and repetitive tasks, the teaching team is able to dedicate more time to teaching methodologies, just as managers are allowed to focus on strategic issues.
In conclusion, it is worth mentioning that, in order to optimize the management in the education sector using technology, it is very important to choose a software provider with credibility and knowledge about the area.
Do you want to know more about the MyABCM solutions for mapping costs using technology in your company? Then contact our team so that we can show you the very best in digital innovation for your business!
Present in the most diverse segments of the market, data analysis is a procedure that has revolutionized modern society. In short, it consists of using technology to process large volumes of information in a few seconds and generate relevant insights for strategic decision-making.
As the public sector has also been following the current process of digital transformation, modernizing its channels of communication with the audience, and carrying out operational processes, data analysis cannot be left out of companies linked to government agencies.
Therefore, we’ve prepared this post so that you understand the importance of data analysis for public services. Read the article to learn more about this topic!
If you follow the technological trends for the corporate world, you may have noticed how the integration of company departments – using CRMs and ERPs – has gone from being a mere whim of entrepreneurs with a “modern view” to being a competitive “requirement”.
This is because eliminating communication noise and integrating all information sources in a single digital environment leads to cost reduction and boosted productivity, while also improving the data analysis. And these same principles apply to institutions that provide public services.
Let’s say the Municipal Department of Education wants to organize a cultural tour with public school students. To do so, it must make a formal request to the Municipal Department of Culture and the Municipal Department of Finance.
Without the use of technology capable of integrating communication and data in a single system, this process would be highly bureaucratic, time-consuming, and susceptible to several errors. Now, with innovative technological solutions, both the communication and the data analysis in the public sector are improved.
The first step in choosing a public management system is to make sure that the software provider has enough credibility and experience to offer transparent and effective solutions, both for employees working in the sector and for citizens.
It is very important that this system is equipped with resources that allow, for example, the availability of information about expenses, the integration of departments and, of course, data analysis to improve strategic decision-making.
Another point to be considered is the tool’s ability to use data intelligently through Big Data, as this area of knowledge provides a series of benefits, such as:
As you could see, data analysis is already a reality in organizations of different sizes and market segments, which has led utilities to invest in the modernization of processes as well. We also showed you how to choose a technological tool for the public sector.
Do you want to keep up with all the informational materials, tips and news posted on our communication channels? Then subscribe to our newsletter right now to receive MyABCM content directly in your email!
To be successful in the services market and ensure a good position against the competition, it is essential that managers aim to improve their knowledge of management. In this regard, among the issues that should be worked on in the business, we can mention various aspects of the financial sector, such as the implementation of a good chart of accounts for the company.
Basically, this concept refers to a set of transactions that represent the economic and financial demand of the company. Thus, the main goal is to organize the accounting work related to the records of operations. This plan also guides the preparation of the financial statements, as well as the business’s financial information, such as the Balance Sheet and Cash Flow.
Due to its importance, it is essential to know how to develop this strategy in your institution. To help with this topic, we’ve listed some tips in this article. Check it out!
First of all, we must emphasize that a company’s accounts will always have characteristics that are specific to your business. Therefore, to have an efficient chart of accounts, you need to create something personalized in order to meet the enterprise’s registration requirements.
The first step in setting up this strategy is to describe the groups in the chart of accounts. In this case, it is divided into four groups. The first group is “assets”. It can be divided into current, non-current, long-term, fixed and intangible assets, and investments. There is also the group of “liabilities”, which includes current and non-current liabilities and equity. In addition to these, we have two other groups: revenues and expenses.
Another important point is that this accounting strategy should be set up in a visual structure in the form of a “tree”, so that there are levels that branch into sub-levels and so on. Furthermore, it is interesting to start organizing the processes by revenues, then by expenses, until finally arriving at the final result.
In the case of revenues, the type of product or service that justifies the inflow of funds in the institution should be established, as well as the nature of the transaction and the categories to which it belongs. It may also be useful to separate into subgroups, as is the case of “Revenue resulting from product sales” and “Revenue obtained from services”.
Another tip is to detail the direct expenses that are related to the revenues achieved, such as raw materials, sales commissions, logistic transportation, cost of goods sold, etc.
Well, these were the main information about how to prepare a chart of accounts for your company. It is worth noting that this strategy has the advantage of allowing for a better view of the company’s assets, liabilities, revenues and expenses, making processes more organized and effective.
Did you like the article and want to know more about business management? Then subscribe to our newsletter and stay on top of all our updates!
The routine of a hospital involves different departments with very different demands; in other words, the management of resources must be impeccable, and done always with the help of technology. After all, it is necessary to implement several processes in order to identify, acquire and manage everything that is required in the day-to-day operations.
So that you can always keep the resources well organized, we will give you some essential tips in this post. Check it out!
Resource management is a way for the manager to account for everything that exists within a hospital, having a thorough control of equipment, supplies, raw materials, human resources, etc.
In general, it is an operational organization, inserting into the software all the property specifications, including data that help in new acquisitions and management.
As a result, waste is avoided and there is a better use of materials, whether physical or the team’s.
Resource management aims to improve the hospital management, optimizing time and reducing costs, which has a direct impact on increasing the productivity.
By keeping everything under control, it is possible to put into action plans that are properly aligned with the hospital’s budget reality, avoiding decreased revenue or even loss of equipment.
For example, by knowing how many sheets are available in the hospital, the manager will have an indication of when exactly they should acquire new ones, always maintaining the quality of care, with a focus on patient satisfaction.
Now that you know what resource management is, we will give you five tips that cannot be forgotten in your hospital.
The first tip is essential: you need to make plans for actions, as well as for everything that exists in the hospital.
To this end, carry out a survey on the amount of equipment, number of beds, employees, cash flow, financial reserve; in short, resource management starts with knowing the reality of the place.
Once this information is inserted into the software, you will have a systemic view of what you can do.
Once you know the amount of material and human resources existing in your hospital, with the respective numbers for each department, it will be possible to set management goals.
That is because the numbers help to set goals that can be achieved in a given period. As a result, the management is professionalized and has the potential for various improvements.
A resource management checklist will provide many advantages. Among them, we can mention the identification of resources that should be acquired, maintained or eliminated.
That way, you will know which departments need more nurses, which can be reduced, and the segments that need new materials.
As a result, the hospital’s operation will follow a quality standard, preventing the lack of certain materials or their loss due to the expiration date, as in the case of medicines.
Resource management isn’t put into practice overnight. It requires multiple processes. Thus, setting up a schedule is essential for you to not get lost in the activities.
Set specific and realistic schedules for each department, including those related to physical and human materials.
By setting goals for completing the steps, you will certainly be able to accomplish everything that is needed improve the management of the hospital.
Counting on the help of the team is essential for your hospital to achieve the pre-established goals. In this regard, it is important to keep the communication objective and always focused on everyone’s well-being.
Motivate your employees and hold meetings to follow up on the results. Once again, management software is crucial to keep the reports up to date and properly monitor the performances.
As you can see, there is nothing better than always relying on technology in resource management. It is an aid that brings gains in competitiveness and greater market presence, keeping management at a level of excellence.
Are you still not familiar with our IT solutions? Then take this opportunity and contact our team right now!
Managers of large companies are always looking for smart solutions to optimize the corporation’s results, tasks and sectors. In an effort to have more reliability and automate processes, we have two options: CRM and ERP.
These systems are capable of ensuring a better development of many routine activities. However, companies have distinct needs and conditions that should be considered before making any kind of investment.
Although both offer benefits for your company, each of them has some important and unique characteristics. To learn more about the advantages and how to choose between CRM and ERP, keep reading this article.
What is ERP and what are its advantages?
ERP (Enterprise Resource Planning) is a type of management software aimed at data integration, which allows daily processes, such as billing, cash flow, purchase control, inventory, accounts, expenses and tax collection, to be carried out more efficiently.
That way, it is possible to control the information flow in a single system, allowing full management, administration and solid basis for decision-making in all sectors of the company. In addition, its main advantages are:
Issues that an ERP system can solve
The managers of an organization face many challenges, such as controlling the responsibilities of each employee, meeting deadlines and ensuring the quality of service. In this case, many problems are generated by the inaccuracy of information. An ERP system can solve many of them, such as:
What is CRM?
CRM (Customer Relationship Management) is a solution aimed at internal management, more precisely at strategies for sales, marketing and even customer relationship.
To that end, it works in the identification of the best strategies and in methods indicated to increase your sales, protects the company’s confidential information, and can also improve your services or products. What are the advantages of investing in this type of system? Check it out:
Issues that CRM software solves
In addition to the benefits of this tool, it helps to solve several problems, such as:
Thus, this technological solution helps to ensure strategic information so as to make the work of managers easier and avoid losses in the business.
After all, is it worth it?
Absolutely! When CRM software and ERP management systems are chosen according to the business’s needs, the company can stand out in relation to the competition and process efficiency.
In addition, this type of investment may increase the articulation capacity of your sales team, which makes the decision-making easier and allows carrying out improvements in cost reduction and marketing strategies to boost sales.
Why integrate CRM and ERP?
Integrating the finance department with the commercial sector ensures greater agility in negotiations and sales. From there, your company’s marketing team has more information from a financial point of view. Furthermore, these tools ensure efficient sales, making them faster and more dynamic.
Integrating these features also allows your team to have access to a variety of shared data. This also avoids duplicate information, reduces costs and rework, and ensures a better use of resources.
Another interesting factor is that merging CRM and ERP helps your business grow. When they don’t work together, they need to be kept up to date frequently, and any change to one of the systems creates the need to change the other. Therefore, by cross-referencing the information and with faster sales, it is possible to make more accurate decisions and strategies.
The integration of these tools also guarantees the information security in the company. That is because it is possible to unify the database and rely on CRM and ERP software that store all files in the cloud. That way, managers avoid data loss and document leakage, which are factors that harm the company and its customers.
How to do this integration efficiently?
At this point, it is essential to customize the merger between CRM and ERP. To do so, look for suppliers that customize the tool and provide systems for simple and complex implementations that handle large volumes of data.
Moreover, the company needs to invest time and money in this task. It is also important to plan these processes in order to perform all business activities as expected. To obtain more satisfactory results, a tip is to make this adaptation according to the business’s needs. That way, you can avoid problems with software and improve your team’s internal processes.
How to choose?
CRM and ERP are systems with different goals: ERP is aimed at financial control, while CRM is about consumer management. With that said, both software can be implemented in the corporation.
CRM is critical for companies in the sales industry, whether it’s products or services. As such, it is very useful at all stages of the enterprise, even in those in which the managers are already looking for improvements and growth. In turn, the ERP system is necessary for all businesses that seek efficiency in resource management.
Often, the absence of these two tools in an organization negatively impacts the business’s results. After all, the company will not have a resource that automates processes and improves earnings. As a result, it will not modernize its operations and will use outdated tools that hinder its development; thus, it runs the risk of being overtaken by competitors in the market.
Both CRM and ERP software should be seen as smart investments for your company. After all, for any type of business to stand out in the market and have a healthy growth, it is necessary to adopt strategies that improve its sales team and ensure complete control of the entire financial situation.
Was this content helpful? To keep up-to-date on the business world and get tips to succeed in your management, sign our newsletter and receive our news.
Keeping a company running requires planning. Because of this, entrepreneurs dedicate a lot of time to develop studies that can help them with this mission. An example of this quest is to better understand the net working capital.
Not understanding its real importance can often lead the company to its closure. This is usually related to a lack of financial organization.
If you are not sure what this concept means, don’t worry. This article will explain what net working capital is, how to calculate it, how to prevent its deficit, and what factors affect this resource. Shall we?
What is the net working capital?
A company cannot wait for all its customers to pay their debts to keep operating, right? After all, it takes a few months to bring a return to investors after a business starts running. Even then, it has to bear the costs. During this period, what keeps the company running? The answer is: the working capital.
With this resource, it is possible for a trader to restock their store after selling almost everything, even if their customers have paid in installments, for instance.
Thus, the working capital is restricted to the amount needed to make the enterprise operate. In turn, the net working capital has an even more specific function.
It represents the assets your business has that can be turned into cash. Some examples include:
Therefore, it is a study that tends to reveal your company’s ability to continue operating, but also pay its debts.
How to calculate the net working capital?
The first step is to identify the current assets and liabilities. Current asset is an accounting term that shows all the goods a company has, in addition to all the capital it will receive in the short term (up to 12 months). This information is on the company’s balance sheet.
With it, we find the liquidity of the business. Note that each item in the current assets has its own liquidity.
Current liabilities are the part of the balance sheet that includes short-term debts (12 months). It usually refers to the payment of suppliers, taxes, financial charges, etc.
To know the amount of the current working capital, the following calculation must be made: Net Working Capital (NWC) = Current Assets (CA) – Current Liabilities (CL).
If the result of this calculation is negative, it could mean that the company will have to resort to third-party capital, such as a bank loan, in order to pay its debts.
Why is it important to know the net working capital?
The goal of an enterprise is to bring financial return to investors. That is why a company that cannot pay the bills needed for its operation will hardly be seen as a good investment.
In many cases, there is a demand for the product or service marketed, but because administrators don’t carefully study the company’s numbers, they make the wrong financial decisions.
A company needs the working capital to operate, and an entrepreneur has to know the net working capital amount in order to understand the debt capacity of a business, as this will determine the direction of investments, influence negotiations with suppliers, and reveal the liquidity of the company’s assets.
Failing to control the net working capital can pose several risks to the organization. Your cash can become negative, which compromises the proper operation of the business. Therefore, it is important to prevent the deficit of these current assets in order to ensure a positive balance. To do so, it is simple. Here are some tips:
So, if you don’t want to go through financial problems, try to ensure favorable conditions for your company to have enough money left, and thus, have net working capital. This is essential to meet customer needs and keep up with market growth.
Some situations affect the net working capital positively and negatively. Therefore, it is important that they are monitored and controlled in order to ensure the organization’s financial health. Check it out!
If the net working capital amount is positive, the business will have cash available to pay current liabilities in the short term. Some points that benefit this process include:
When the net working capital is negative, the organization will certainly not have enough funds to pay off its short-term financial expenses. Check out what negatively influences this resource:
Knowing these factors, pay attention to all the points mentioned that influence the net working capital. However, keep in mind that this current asset is not the amount of money needed for the company to operate, but the resource that verifies whether it is capable of financing itself in the short term.
Given this, it will be of little use for an enterprise to have good products, efficient marketing and an excellent team without working capital. Thus, without the health of this resource, all other efforts of the company will be jeopardized.
A tip to make the financial management easier and keep the net working capital stable is to rely on technology. Nowadays, there are several financial control software that assist in these processes, handle a large volume of data and offer the integration of the company’s sectors.
Now that you know what net working capital is, how important it is, how to prevent its deficit and what factors affect this resource, be sure to apply a strategic financial management and invest in technological tools. This will help increase your profitability, keep good process maintenance and control the company’s cash flow.
Was this content helpful? Subscribe to our newsletter to receive more articles about the business world and keep up to date!
