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Jul 10, 2024
Why Most Companies Struggle with Cost Accounting (And How to Fix It)
![](https://framerusercontent.com/images/lo8hcqJBVpBdSyulcBQQChhLog.jpeg?lossless=1)
Samuel Akinwunmi
In today's fast-paced business environment, understanding the true cost per customer is crucial for making informed decisions and driving profitability. Yet, many companies still struggle with implementing effective cost accounting practices.
The Challenges of Traditional Cost Accounting:
=IF(OR(ThisQuarter!I8<=$D$3,NOW()<$D$3),F8)+IF(AND(NOW()>LastQuarter!$D$3,NOW()<$D$5,I8>$D$3),ROUND((H8*(NOW()-$D$3)/30*2%)+F8,0))+IF(I8>$D$3,ROUND(H8*(I8-$D$3)/30*2%,0)+F8)+IF(AND(NOW()>LastQuarter!$D$5,I8=0),ROUND((H8*14%)+(F8*14%),0))+IF(AND(NOW()>LastQuarter!$D$3,I8=0),ROUND((H8*(NOW()-$D$3)/30*2%)+F8,0))
Complex cost allocations in spreadsheets often result in formulas that look like 👆 These formulas are not only difficult to create but also challenging to maintain, audit, and understand.
Most FP&A tools aren't built with advanced cost accounting capabilities out of the box. This leaves finance teams scrambling to cobble together solutions that often fall short.
For digital companies, cost drivers are hidden in engineering logs and events that represent customer actions. Traditional accounting systems aren't designed to capture and analyse this data effectively.
Spreadsheet-based solutions offer limited modelling options, making it difficult to create sophisticated cost allocation models that accurately reflect the complexity of modern businesses.
With data scattered across various systems, integrating all the necessary information for accurate cost accounting becomes a significant challenge.
The Real Problem: It's Just Too Hard
Too complex for the right people to be involved in the decision-making process
Reliant on arcane tools that are difficult to audit and trust
Plagued by long lags between data collection and decision-making
Bogged down by endless cycles of emailing spreadsheets and arguing over their validity
Time-consuming to build, use, and maintain
A Better Way Forward
Automates data ingestion from ERP systems and operational sources
Allocates costs to specific actions in real-time
Provides customer-level profitability insights across different vendors
Calculates the cost for every single event on the platform
Uses machine learning to identify characteristics of the most profitable customers
Offers AI-powered summaries and insights for quick decision-making
It's time for companies to move beyond the limitations of traditional cost accounting methods. By embracing modern, purpose-built solutions like Bilanc, finance teams can gain the real-time, granular insights they need to drive profitability and make informed decisions in today's fast-paced business environment.
![](https://framerusercontent.com/images/lo8hcqJBVpBdSyulcBQQChhLog.jpeg?lossless=1)
Samuel Akinwunmi