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Controlling a company’s expenses plays a large role in maintaining the health of the company itself. Without measurable controls, companies can experience waste or even a lack of funding for their operations. Cost control is a term used in connection with measurable controls within this organization.

Cost control is an attempt to create planning standards based on information owned by the company relating to all costs required in operations to achieve its goals. These efforts are also carried out with practical and structured control so that the assets and resources owned are maximized through wise use and waste or wrong business policies are avoided.

Therefore, it is of course understandable that its role in the context of business efficiency is large. Therefore, here is a complete explanation of the tasks, functions, goals, and steps to implement them efficiently in your company.

Key Duties and Responsibilities of Cost Control

These activities have clear duties and responsibilities and should be carried out to the best of one’s ability. Failure to do the tasks listed below will result in business losses and massive business setbacks in the long run.

  • Plan and manage product inventory in the warehouse each month
  • Verify validated product inventory with clear documents
  • Regularly review all product inventory and validate it with clear documentation or capture it in the system
  • Ensure cost control policies are implemented in a disciplined manner and per what has been agreed
  • Every transaction that takes place must be consistent with existing and valid documents for the sake of efficiency in business expenses
  • Prepare expense reports regularly
  • Coordinate with all related departments, for example, the purchasing department, involved in the new goods receipt activity or relation to returns
  • Manage the flow of goods in and out of the warehouse
  • Reviewing all product requests and ensuring they are consistent with the agreed documents

Isn’t the task of implementing this cost control quite a lot and detailed?

 

What does it do with all those duties and responsibilities?

There are basic functions that must be performed to fulfill the above duties and responsibilities. This function is then broken down into three broad categories ranging from planning, and monitoring to coordinating functions.

 

  1. Planning function

This first function is executed before it is executed any further. It is necessary to formulate a cost control plan that will be carried out and estimate what costs will arise in the future. In this plan, the approximate amount of expenses that will be needed and how much money will go into the business will be known.

  1. Second, supervision

The second function of cost control is to make comparisons between the costs incurred in the previous period and the current period. With this comparison, you will know what needs to be compared and whether the plan’s wording is appropriate and consistent with the company’s goals in general.

 

  1. Finally coordination function

To avoid misunderstandings in any area, the coordination function must be exercised to continuously check and ensure that everything is going according to plan. The comparison between physical files and the files stored in the information system used must become routine so that the risk of loss due to fundamental errors can be avoided.

 

Understand the purpose of cost control efforts

Whatever is done by each division or department within the company, there is always a clear purpose. As part of cost control, their main objective is to control the costs incurred by the company in each of its segments. This is important to maintain the financial health of the business and keep the business from wasting. Uncontrolled spending can risk big losses, but underspending can also make it difficult for a business to grow. The implementation of cost control is the main task so that the company uses its resources at the optimal point to head to the target point on time.

Check out the 4 steps for an efficient implementation

  • Implementing cost control measures is the right decision for any size of business. Ranging from small businesses to large corporations. There are 4 phases or steps in applying this concept in a business.
  • Physical surveillance control, the first level is used when the business or business holdings are still small. This method is effective when planning, monitoring, and decision-making are done directly by the business owner.
  • The historical accounting phase is performed at larger companies as it facilitates the preparation of estimates and financial reports. This makes financial planning and cost control more effective.
  • In addition, standard budgets and costs are relatively easy cost control for companies with sufficient experience, since clear planning and accounting are in place. In this way, operating expenses arise naturally and flow without wastage.

Budgets and costs are flexible, this cost control takes place in a short time for companies with abstract plans. The financial plan that is in possession is only about a span of 3 months.

Cost control is a fundamental effort to be able to control the expenses in the business you have so that it has good efficiency from a financial point of view. This must therefore be used measurably in order to achieve the maximum output.

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