Unprofitable activities: the hidden cost

摘要

Accountancy is the numbers specialism, and yet it's surprising how often accounting firms demonstrate the same disregard as other less numerate service businesses for the most telling figures of all. At the heart of the problem is the very basic difference between top line income and bottom line profit. Practically no knowledge is more valuable to any firm than the ability to identify which customers are generating the lion's share of their profit.This sounds so obvious, yet a remarkable number of firms do not have this key information - the information that drives their bottom line - at their fingertips.The result is an operating model in which costs are simply not aligned efficiently to profit generation. Expensive people are tied up with marginally profitable (or even value-destroying) work, and the firm's activities and resources are spread too widely across an unstructured raft of sectors, specialisms and locations.