In order to properly manage a business, you must be able to determine where and how costs are incurred and where you receive the benefit of those costs.
Accounting systems typically used by small companies are designed to provide the information needed to prepare financial statements and tax returns. These systems provide basic functionality such as invoicing, accounts receivable management, accounts payable and check preparation, payroll and labor management, general ledger maintenance, and financial and tax reporting. The functionality provided by these types of systems is sufficient for basic reporting to your bank or investors, and to help in the preparation of company tax returns.
However, in order to make management decisions, company’s need more detailed information regarding not just what types of costs were incurred but where the benefit of those costs were received. This is true not only of direct costs that are attributable to some type of measurable event such as a contract or a product sale, but also of indirect costs whose benefit cannot be identified with any specific event.
The problem with systems capable of providing these benefits is cost and complexity. Acquisition costs can be high, but are often dwarfed by the cost of manpower required to operate the system. This is usually apparent in two ways. First, most of these systems require an inordinate amount of data to be entered in order to operate them. This requires additional personnel whose primary function is to operate the accounting system. Small companies can little afford increasing this type of overhead when resources are usually needed in a more strategic or productive area within the business. Second, the personnel required to operate these systems must possess extensive knowledge of cost accounting techniques to perform many of the tasks required. Individuals with this type of knowledge and experience often command considerable wages further exacerbating the cost problem.
Most small companies cannot afford the cost of acquiring and operating accounting systems capable of collecting and managing detailed cost and profitability information. MOSAIX has developed VIRTUOSO™ to specifically address these issues as well as other accounting and management issues.