The next type of control is on-going. It is used in the day-to-day operations of the enterprise when costs arise. Effective on-going control requires feedback that includes information about the work being done and the level of costs at all stages of production. At this stage, the current cash costs for production and sale of products are monitored, as well as the expenditure of resources and compliance with the deadlines for work.
Final control is the last control in the cost management process. Like current control, it is based on feedback. The final control is to compare the results obtained with the planned ones. The management determines the tolerance of the level of deviations. If deviations are unacceptable, it is necessary to review the current cost strategy and develop appropriate measures.
Modern economic conditions are characterized by a highly dynamic internal and external environment, as well as increasing uncertainty, so management personnel need to constantly improve the cost management system so that it can adapt to unstable economic conditions.
The elements of the cost management system (planning, accounting, analysis, monitoring) are summarized in a common table representing the cost management system by phase. This table is generic and may vary depending on the direction of activity and the size of the enterprise.
Competent cost control helps to reduce the level of costs of the enterprise, increase financial stability and flexibility in the face of external and internal changes.
The cost management system is an important part of the overall management of the enterprise, as it includes information on actual costs and ensures the achievement of the planned level of profit, a quality cost management system is necessary to achieve positive financial results, improve operational efficiency and timely response to problems.
A rational cost management system allows you to quickly receive and analyze information, which facilitates:
- Forecasting financial and production results.
- Effective allocation of resources.
- Building an information base for decision-making.
- Planning for tax optimization.