Getting the best activity-based costing software often is an important step in monitoring and controlling business costs. A business normally has many different cost lines, and activity-based costing software should report on all these lines so you know exactly where the money is going. Costs are supposed to bring in profits, so a good feature to look for may be a revenue and cost comparison system. Costs and profit reports typically are needed for presentations and archival purposes, and a program that offers this usually is better. Most businesses have databases and, if activity-based costing information can be easily integrated into the database, then this may make it easier to control costs.
A business often has to use money for many different reasons, and each of these is known as a cost line. Some common lines include marketing, product creation, employee payroll and other operating costs. If the activity-based costing software just says you spent $1,000 U.S. Dollars (USD), then this may not be as effective as a program that says you spent $200 USD on employees, $600 USD on product creation and $200 USD on marketing. It usually is better to know exactly where the money is going, so costing software that reports on different costs lines normally is better.
When you spend money on your business, that money is expected to grow because of sales or other profit-making strategies. To see if the costs are justifying their revenue, it normally is best for activity-based costing software to have a revenue comparison system. This will compare how much you have spent on your cost lines and show you how much revenue you made through the expenditures.
Profit and cost reports are important for a number of reasons, especially when it comes to a business spending money. This means activity-based costing software likely should come with reporting and analytics tools. Detailed reports normally are better, so costing software should be able to report on many different facets of cost and revenue.
The importance of data means your business, in 2011, most likely has a database. Consolidating business data usually makes it easier to find, retrieve and use that data. If your activity-based costing software has an easy integration feature, then less work will be needed to get the two to work together. Otherwise, you may need to make complicated manual exporting and importing functions, which may be difficult and can decrease the effectiveness of the costing software.
