Financial Management

From accounting information, business owners can consistently contain and control the unavoidable costs, while continue seeking innovation method or think out of box to increase avoidable cost. Strategic planning and risk mitigation can be performed to gain savings from opportunity costs. Business owner can leverage business analyzer's market insight to make better decisions to stock up raw materials during low price. Business owners frequently review incremental costs and benefits to ensure profit and loss is heading towards the right direction with more profits than losses. One-off order has to be weighed against additional cost and profit margins. Some special customers would request multiple one-off big orders with higher negotiated selling prices in order to be market leader securing products availability in the market. Ideally supplier business owner should 1st fully utilizes all excess capacity while still getting the higher selling price for the one-off orders without need to disclose to customers. If supplier already at full capacity, only accept the one-off order with guaranteed higher selling price that has to be sufficient to cover for penalty for other customers due to failing to deliver sufficient orders. Outsourcing decision is feasible if there is high backlog of orders and internal capacity confirmed cannot deliver per committed schedule. Customers would lost patience and dropped orders if need to wait for too long period of time. Outsourcing can immediately increase output and fill up customer's production line and gain customers trust and appreciation for taking care of their deliveries. A discontinuation decision would be made after thorough assessment that the gross margin of the products did not meet the expectations of business owners. It can be profit more than cost, but still lower than other product lines that are making higher gross margin gains. It can also be negative profit due to high cost. Discontinuation a product or business line would able to relocate financial and people resources to another higher gross margin product or business lines and strengthen further as business leader in the industry. Usually discontinuation have to be handled gradually as existing customers need to switch to alternative products or solutions. There is also risk of big customers reluctant to switch and threaten with legal actions or bundle with other types of product orders as 1 order. So a mutual agreement is needed that eventually the low margin product would be discontinued at a clear schedule with final shipment or support to customers.