Activity-Based Management for Financial Institutions: by Brent J. Bahnub, Gary Cokins

By Brent J. Bahnub, Gary Cokins

Discover how you can use activity-based administration to enhance your backside line

The first publication of its variety to target activity-based administration within the monetary prone undefined, Activity-Based administration for monetary associations: riding final analysis Results will help you force adjustments on your organization's backside line.

After offering a short review of a monetary prone activity-based costing version, this ebook makes a speciality of tips on how to at once increase internet source of revenue, overlaying crucial themes together with costing, chargeback, and pricing; enforcing ABC; imposing ABM; dealing with organizational swap; and warding off pitfalls.

  • Written for these within the monetary providers industry-banks, securities companies, coverage companies
  • Reveals the best way to force merits to the base line via disciplined execution of activity-based administration and organizational swap management
  • Provides genuine global examples and instruments for speedy effects and sustained success

This exceptional ebook will take your bank from caught to financially winning, riding profitability and performance.

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Additional info for Activity-Based Management for Financial Institutions: Driving Bottom-Line Results (Wiley and SAS Business Series)

Sample text

Nothing. There was no drill-down and no attributes. 1 million in Maintenance? ) since there were no meaningful sales or setup costs associated with this product. Strange . . Well, surely we can clear this up within the cost accounting system, right? 7. Here it becomes more perplexing. Both Sales & Acquisition and Maintenance continued to be vague with only a single ‘‘detailed’’ activity rolling up to each. The allocation (not assignment) logic for the Transaction activities was not available without a system deepdive and most disturbing was the fact that many ‘‘support’’ activities were actually allocated (not assigned) outside the costing system.

If ABC/M will be used solely for process improvement, the scope can be much less ambitious—front office or shared services. During an ABC implementation, a line (front office) finance manager who professed to ‘‘really want to know’’ the cost of her products was initially surprised when I told her that we need to find out how the sales force is spending their time. ’’ The sales force was responsible for approximately 80% of most product costs in this LOB. We went on to discover a poor sales force process, poor sales metrics, and a misaligned incentive plan which rewarded the sales force exclusively on revenue without cross-sales, while 16 I COSTING, CHARGEBACK, AND PRICING the corporate strategy was based on improved profitability through cross-selling.

Unfortunately, it is not uncommon for non-ABC systems to allocate costs from a marginally profitable product to a highly profitable product, thereby distorting the true product costs for both products. The marginally profitable product looks more profitable than it really is, while the highly profitable product appears less profitable than it is. 8. However, since the costs were allocated outside of the costing system, the impact and method were undiscovered by the users. In this case, support costs were incorrectly assigned to corporate activities.

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