Managing your expenses and investments company is not easy and requires having all the information and data about the business in a clear and easy way. Among this data, one that is very important for managing accounts is related to outgoings, which are all the expenses of the establishment in a given period.
However, these exits have some divisions, which are expenses and investments important for us to be able to identify where the company’s money is being allocated and, therefore, make more assertive decisions.
The main types of outputs used in the business environment are costs, expenses and investments . And it is exactly about these three types of expenses that we will talk about in this article. If you have any questions about this topic, continue reading this post.
Why differentiate these expenses?
For some people, the difference between buy phone number list these terms may even be irrelevant, but we know that to manage a business it is necessary to have a clear definition of each word.
More than just a nomenclature, differentiating these expenses is an accounting necessity . This allows you to monitor the financial health of the organization and, when necessary, make adjustments to the budget.
What are costs?
Cost is the total amount allocated to the how to use technology to improve your productivity production of goods and services . In other words, it is the expenditure allocated to the production of all goods and services directly linked to the company’s activity.
Costs can be divided into direct and indirect costs . Direct costs are everything related to the manufacturing of a product, such as raw materials, for example. These costs must be very well measurable, since they must be included in the calculation of the production cost.
Indirect costs are those that are indirectly linked chile business directory to the production of a product , such as machine maintenance, cleaning, among others.
To make sure that it is really a cost, just ask yourself: “Without this expense, is it possible to sell/perform the product or service?” If the answer is no, this expense is considered a cost.
What are expenses?
Expenses are those amounts spent to manage and sustain the company’s operations without having a direct impact on the production process.
These expenses are not intended to generate financial returns , but are necessary for the company to generate revenue. Some examples are electricity, water, rent and taxes .
Expenses can be divided into fixed and variable . Fixed expenses are those that do not change, even if the company’s production and/or revenue fluctuates, such as rent, internet/telephone, energy and security.
Variable expenses are those that vary depending on the company’s revenue and are directly linked to the cost of the product. The main examples are commission, taxes and acquirer/card fees.
If you have an e-commerce and offer a free shipping promotion, for example, the amount allocated for shipping will be considered a variable expense.
What are investments?
Investments are like applications of resources; they are amounts spent with the aim of obtaining a financial return in the future. Examples of investments include a loan for factory expansion and the acquisition of new equipment.
Investments are not just the acquisition of physical goods. If a company purchases a professional training course for an employee to acquire/improve a skill related to their role in the company, this course can be considered an investment, since the organization will benefit.
If you are in doubt as to whether something is an expense or an investment, we advise you to ask whether such expenditure will add value to the company in the future.