Regular financial analysis is an essential process that helps companies understand their financial situation, assess business performance and develop a strategy for future development.
Although most of the factors that influence the cost of production and services are market driven, regular financial analysis and production cost calculations are still valuable for a number of reasons.
Knowing the cost of your products or services can help you understand your margins and identify areas where you could improve your operations. Even if you cannot control the selling price (e.g. the purchase price of milk), you can still influence the cost of production by controlling inputs and production practices.
For example, in dairy farming, feed costs can be evaluated and alternative feeds that might be more cost-effective can be assessed. One can also look for ways to improve cow health and productivity, for example by introducing a vaccination programme or investing in new milking equipment. Controlling your production costs can increase profits, even if purchase prices remain low.
Keeping track of the cost of products or services can help you better understand the risks and benefits of different pricing and production strategies. For example, again based on dairy farming, investing in a new feed or milking system can be evaluated on the basis of potential long-term cost savings, even if it requires an initial investment
Finally, tracking costs and conducting regular financial analysis can also demonstrate to lenders and investors that a company has a solid understanding of its business and is taking steps to manage risks and maximise profits. This can help to secure funding or attract new investment
As a company grows larger, it can be difficult to keep track of all income channels and expenditure items. However, a full-time employee is not yet necessary for the company. That's why we have developed a service - regular financial analysis as an outsourced service:
Receive news about EU funding and other hosted development opportunities in your email.
This service is particularly useful for companies with an annual turnover of €1-5 million, where the complexity of financial management increases, it is difficult to maintain transparency and track income and expenses, and a full-time employee is not yet cost-effective.