Designing costing and management reporting system
Situation
A large company involved in event and project management has been enjoying tremendous growth since inception. The company has been in this industry for more than 8 years. Although sales increased, profit declined rapidly. The management has taken numerous actions including reducing operating expenses, purchased relevant software and other actions. Notwithstanding, the declining profit trend still continues.
Situation
A large company involved in event and project management has been enjoying tremendous growth since inception. The company has been in this industry for more than 8 years. Although sales increased, profit declined rapidly. The management has taken numerous actions including reducing operating expenses, purchased relevant software and other actions. Notwithstanding, the declining profit trend still continues.
Actions / Challenges
Leap Forth was engaged to review the situation, identify the problems and propose suitable solutions. Our review indicated that the company has capable management, clear corporate vision and mission, and it has sufficient experienced professional staff. The main causes were identified as ineffective costing and lack of management reporting system.
Basing on these findings, we designed a simple yet effective costing model to facilitate accurate costing for each event / project. The financial modeling for costing can be used without the need to purchase additional software as it can be used with existing spreadsheet. A new management reporting system was also designed to complement the existing financial accounting reporting system. The management reporting system can track staff performance, profit margin of each event / project and other critical information.
Results
Upon execution of the costing and management reporting system, the benefits are:
Leap Forth was engaged to review the situation, identify the problems and propose suitable solutions. Our review indicated that the company has capable management, clear corporate vision and mission, and it has sufficient experienced professional staff. The main causes were identified as ineffective costing and lack of management reporting system.
Basing on these findings, we designed a simple yet effective costing model to facilitate accurate costing for each event / project. The financial modeling for costing can be used without the need to purchase additional software as it can be used with existing spreadsheet. A new management reporting system was also designed to complement the existing financial accounting reporting system. The management reporting system can track staff performance, profit margin of each event / project and other critical information.
Results
Upon execution of the costing and management reporting system, the benefits are:
- Improved the accuracy of costing for all events / projects
- Increased awareness of profit margin, compared to just increasing sales with low margin
- Enhanced the management reporting system to beyond financial accounting numbers
- Minimised the need to manually preparing monthly performance reports
