The classic definition of analytical accounting, also known as cost accounting, says that it is a set of techniques used to study the way in which costs and revenues are distributed in a company to generate information for internal use and make better business decisions. Aaron Rodriguez, an expert in optimizing business development through infallible methods, provides the information necessary to take advantage of the benefits of analytical accounting.
In order to have a clear idea, it can also be said that analytical accounting is a branch of accounting that distributes the expenses and revenues of each line of business, product, department or customer to calculate results separately. “Analytical accounting is not mandatory, but many companies do it because it is a good tool for business control without requiring a lot of effort,” Rodriguez explains.
This allows you to analyze in-depth the revenues that have been generated, the costs that have been incurred, calculate the profitability of your products, and understand why you are getting the results you are getting. It can also help you to control the costs of projects, departments, stores, production sites, suppliers and make decisions about them. To make important decisions in your business, it is very important that you analyze the information you have and understand the context before changing anything. Analytical accounting can be very useful in this regard.
Rodriguez adds, “The information provided by these documents can be decisive when it comes to making decisions in your business. For example, it can help you decide whether or not to launch a new product, set or raise the price of a service, buy or not buy new machinery for production, and even close or open a certain department.” The data will show you, from another perspective, the financial state of your company and will illustrate that specific area in which you need to make decisions. With this information at your fingertips, you will feel more confident in taking the path you have chosen.
As it is a proprietary document, the rules are set by the company itself based on its interests and the characteristics of its own business. Thus, you can adapt the document with the data you are most interested in. Still, the display of results in analytical accounting is usually done in two parts. First, detailed and individual annotation: operations performed, values, obligations that appear in documents and accounting books. And then, information of the company’s costs for internal use.
It is important not to confuse analytical accounting and financial accounting, as they have different purposes. The former is not mandatory, but the latter is. The most important difference is that financial accounting is external and records facts that affect the company and its relations with third parties (suppliers, tax authorities, customers, etc.).
However, analytical accounting is for internal use and focuses on other information. Therefore, analytical accounting can be a fundamental tool in the development and growth of a business. In short, it allows you to know precise data on specific areas of the company. You get valuable information to make difficult and important business decisions. You can control more or better the company’s expenses. Through analytical accounting, you can find an improvement in productivity, profitability, and business efficiency. “Don’t hesitate to start incorporating it into your processes by adapting it to your specific needs. You will see it become an indispensable element in your work,” asserts Rodriguez.