At the Acumatica Summit 2016 in February, Gabriel Michaud, Director of Product Management discussed the much-anticipated release of Acumatica Cloud ERP 5.3. The new release builds on existing functionality, enhances native mobile apps, and provides significant performance improvements.
Among the capabilities announced were improvements in sales reporting, specifically in terms of profitability analysis. Large organizations have had profitability analysis capabilities for some time, usually as part of on-premise, legacy ERP software. Given the complex nature of profitability analysis, such a capability has not been available in many accounting and ERP software products architected for SMB’s and mid-sized businesses.
What’s so important about profitability analysis? It provides an additional dimension of knowledge about business operations, beyond just who sold what to whom. Profitability analysis can help businesses really know their business in important ways, just like the ERP tools for the very large companies.
Traditional SMB accounting systems only calculate profit by netting the debits and credits at the end of an accounting period. If they’re lucky, they get summary monthly results by product lines. Imagine being able to know the profit of each transaction day-to-day, allowing you to identify trends and take appropriate actions to take advantage of the new trend.
With Acumatica’s enhanced profitability analysis, you can know the following:
1. Really know your sales team
Sure, you know what each sales professional sells in dollars and units, but do you know which one generates the most profit? With profitability analysis you can easily identify how much profit each sales professional is generating. You could even modify the compensation structure for the sales team to include profitability goals to drive the growth of profit, in addition to gross sales.
2. Really Know your Customers
Who are your “best” customers? Your sales reporting system can probably tell you how much each customer generated in terms of gross revenues, but do you know which customer generated the most profit? Can you quickly identify which customers are costing you money? Are some demanding deeper discounts, and returning a higher number of goods or services? Is it time to let that customer go and focus on the customers contributing to your bottom line? Get these details and be able to take action accordingly.
3. Really Know your Products
Defining a marketing or product development strategy without knowing which products drive the bottom line is just “guessing”. The profit contribution of each product is essential to the formation of short-term and long-term product strategies. Decisions regarding new products to develop and launch, or which products to discontinue, all start with a detailed understanding of each product’s profitability. Even short term tactics for product promotional offers or advertising buys rely on accurate and timely feedback regarding whether such actions were effective in driving revenue and profit growth. Profitability analysis provides such feedback.
These are just a few examples of the capabilities profitability analysis can provide. If you’re an existing Acumatica user, consider upgrading to Acumatica 5.3 with Power BI to improve the analytical capabilities you need to truly understand the results of your business operations. If you’re not a current Acumatica user, you can learn more about how Acumatica Cloud ERP and CRM solutions can provide the execution capabilities and the knowledge you need to succeed.
After all, knowledge is power. The more you really know your business, the more you can really grow your business.