How to spend cost analysis
Video: Spend Analysis - Introduction - Procurement training - Purchasing skills 2024, July
As part of any organization, a person should work who has the abilities and knowledge in the field of research on economic indicators. His task also includes conducting cost analysis. Cost dynamics is a kind of “pulse” of an organization that needs to be monitored, and there are special methods for this.
Instruction manual
1
First, a horizontal analysis is performed. Put the reporting documents in front of you and compare the absolute figures of expenditures in numerical terms during the analyzed period. If there are sharp changes, then you need to consider when researching even before the beginning of the period under consideration. It is at this stage of the analysis that the objectives of the subsequent work are verbally formulated, since an initial assessment of the financial situation in the organization is performed. However, horizontal analysis alone is not enough; it is necessary to continue research at a deeper level.
2
Perform a vertical analysis. Calculate the proportion of expenses of various types in their total number. Distinguish between ordinary, non-operating, operating and emergency expenses. Regular expenses are associated directly with the production of goods and services. Non-operating expenses are not related to the sale of goods, they include rental fees, interest on loans, legal costs. Operating expenses are the expenses of the organization for its normal functioning, which are required daily, but also are not directly related to the production of goods and services. For example, the cost of calculating wages, deductions for social events, depreciation.
3
It is also necessary to analyze individual spending in each type of expense, this allows you to identify unwanted trends in the early stages of the problem. Often at this stage of the analysis, it is possible to identify inappropriate expenses and see a threat to the well-being of the organization.
4
To find out the root causes of changes in expenditure indicators, it is often necessary to conduct a factor analysis of expenditures, which is best entrusted to professionals. They will identify the relationship of variables and draw conclusions about what indicators need to be changed in order for expenses to become more appropriate.
