Archive for the ‘financial’ tag
Faulty Financials - Reason #3 for failed business partnerships
Perceived poor cost performance can be the result of a lack of understanding of the true costs with providing a service or operation, additional costs that occur as a result of managing a partnership, a genuine difference in costs or increased awareness and visibility being mistaken for an actual increase.
Very often and organization has not taken the time to fully evaluate and apportion the true costs associated with providing a service internally until the time comes to have that service or operation provided by someone else. As a result, there may be limited insight into the overhead and administrative costs associated with the service and for some organizations, internal pricing may obscure the true cost of the service itself.
Understanding the fully loaded costs of a service or operation gives real insight into the true cost structure, what savings can and cannot be expected and then provides a suitable benchmark for measuring success over time. It will also help identify where the true costs are and allow the partners to develop an effective plan to improve performance in the right places.
Remember that fully loaded costs include administrative and overhead costs in addition to the costs of providing the service itself.
