subject: Why You Need Profitability Analysis Management [print this page] How profitable is your business? It's a simple question but many entrepreneurs and managers can't answer it. They simply can't answer basic questions: "like what are our labor costs and operating expenses?"
In many companies the only way the management team can answer these questions is to sift through a pile of questionable paperwork. Chances are that paper will be incomplete and inaccurate. Then after several days of work, the team can come up with responses based on data that is several weeks or even months old.
There is no way that such data can be accurate or reliable. The staff has just wasted its time and lots of the company's money to come with an answer that is no answer. It would be impossible to make effective budgets, plans or forecasts based on such information.
Nor is such data useful when an enterprise is seeking investment or financing. Lenders and investors want projections and budgets based on accurate real time information. They don't want proposals based upon guess work.
CO-PA Solutions Are the Answer
Fortunately there are seamless, easy to implement cost effective solutions to this problem available. Modern business management systems like those from SAP can give a company's leadership access to all of its financial, operations, accounting, sales and other data.
That can enable them to create realistic forecasts and plans based on real time data. This way they can show a potential investor or lender how profitable the company really is. They can actually give analysts and others real answers than improvised reports.
The first step in implementing such applications is to talk to a consultant certified by a major business software company. Such a person can actually show you what programs are available and what they can do for you.
By using CO-PA managers can run a profitability analysis anytime they want. This makes for effective projections, budgets and planning.
BW Solutions
By using a Business Information Warehouse, a company's staff can have access to all of the firm's data and documentation at anytime. This can make the reporting process easier and help compliance with Sarbanes Oxley regulations.
Many executives may not realize it but if your company issues SEC registered securities it has to have copies of all of its finance and accounting documents available for examination at all times. This means that you have to be able to hand an auditor the paperwork, not tell him that you think its somewhere in the file room. Having a BI warehouse enables anybody to look up the documents online and print them out when they're needed. Managers and accounts that don't comply with this regulation can actually be sent to federal prison.
This means you can hand an analyst, a lender or a potential investor any piece of financial or accounting documentation that they want to see. It will be easier than ever to get financing and attract investment with the help of certified CO-PA consultants.
