Starting up a new business is a real learning curve. Inevitably, there will be some hiccups along the way, but many bumps in the road can be avoided or reduced by using the help of a dedicated business accountant.
While a good business accountant can offer support to resolve problems as they arise, it can often be far more cost-effective to avoid wasting money now and in the future by using cost accounting to deeply analyse your business costs and highlight financial inefficiencies.
MW Technical Operations offers cost accounting services to local businesses in and around Bristol that work like management accounting to accurately capture your business costs of production, which includes a detailed analysis of all variable and fixed costs of your production processes.
Cost accounting goes much deeper than regular business accounting and the information it generates can be used internally by your management to make better business decisions.
What is the difference between accounting and cost accounting?
We are often asked what the difference is between regular business accounting and cost accounting. Unlike financial accounting that delivers information that you can submit to HMRC and for calculating your tax, cost accounting details the finer costs of your business practices and allows you to understand where your company is spending money, as well as how much and when.
There is great flexibility with cost accounting because it doesn’t need to stick to any set standards and can be used to deliver results in a variety of ways, such as using standard costing, activity-based costing, lean accounting, and marginal costing.
Which style of cost accounting you use will depend on the nature of your business and whether you manufacture or sell products, or your business delivers services that also use consumables and generates overheads that can be costed.
Because cost accounting considers all input costs, including both variable and fixed costs, you can use the results to look for areas of wastage or inefficiencies that are not uncovered with regular business accounting.
Saving you time and money
As your business grows, you will consider taking on more staff, which will add to your payroll and take up more of your precious management time. Running a busy company requires a lot of time and effort, so some of the less productive tasks can get pushed to one side in favour of the essential tasks that generate a profit.
However, your business processes can become stuck in a rut and poor financial decisions set in and become a normal practice. There isn’t enough time for business owners to dedicate to looking at the details of their business structure and methods to see where savings can be made.
This can often mean a company paying over the odds for the raw materials they need from the same supplier, even when the marketplace may have become more competitive and there are better buying solutions that can be taken advantage of.
But without having access to the finer information that cost accounting can provide, most bosses will never know they could be saving money and making more cost efficiencies.
If you want to find out more about cost accounting or the other services we provide, do not hesitate to contact us. We are happy to answer any questions you may have.