Loss making customers or even specific project or contract engagements are a drain every business can do without. Anecdotally, you may think you know but how much work does it take for you to be sure of the exact numbers?
Absolute divisional, customer, contract and project profitability is a challenge each business faces. Understanding the trends of this picture is even more important as you seek to optimise your business performance. Traditional accounting systems are very bad at delivering this information without an immense amount of work. Revenue by customer and cost by supplier should be straightforward reports, but without indexing all transactions by contract or project you will not be able to tie these two views together. The fully loaded costs of your staff time is even tougher to allocate at a project or contract level. It can be done, but it will take a massive effort and dedicated staffing to achieve this on a regular basis.
As service contracts migrate to All You Can Eat (AYCE) models, knowing what it takes to deliver these services is essential to pricing them correctly. Price too high and you lose the contract. Too low and you lose money. Accurate and automatic assessment of profitability is essential to tuning your business for growth.