Customer value and profitability analysis in the context of customer accounting: An application

Companies that have to operate in today's challenging competitive environment have to develop and use new management systems in order to make profit and, most importantly, to ensure their continuity. The concept of Strategic Management Accounting emerged from this requirement and emphasized the necessity of enterprises to make accounting in the customer or customer groups with a customer-oriented approach. The main purpose of customer accounting is to determine the value that each customer or customer group has added to the business. Benefit-cost comparison is used to make a more objective assessment while determining the value added by the customer. Traditional costing methods cannot adequately respond to the needs of today's businesses. It is accepted that the cost-benefit analysis to be made on the basis of the customers served by the enterprises is a more accurate approach. In the customer profitability analysis carried out by using the activity based costing method, the costs are distributed taking into account the activities performed on the basis of the customer. Thus, in contrast to classical understanding, profitability is calculated in each customer's characteristic and more profit can be achieved by focusing on profitable customers. In the scope of the study, the profitability of a business operating in the sector of sifted sand and gravel from the mine quarry in 2018 was examined in terms of customer profitability analysis. Within the scope of the study, it was clearly determined that 3 out of 8 customers served by the business had a negative impact on profitability and reduced the net profit figure. The amount of time and effort the business spends on these customers to its other customers will be positively reflected in profitability. In addition, by determining the specific costs made before the customers, efforts to reduce these costs will be made. The study has shown us the importance of accounting approach that takes customer value into account. As a matter of fact, it is highly probable that the enterprises that carry out their business and transactions with the traditional cost system have wrong costing and wrong pricing strategies. These inaccuracies are also likely to put businesses in a difficult situation in today's markets where a highly competitive environment is experienced. The net contribution of each customer to the sales revenue is not the same as the net profit of the entity. Monitoring customer expenses is of great importance. If customer expenses are not tracked, it cannot be determined that a customer who actually seems to be very profitable actually causes loss. In addition, defining and monitoring activities in order to increase profitability of profitable customers is important in order to remove unnecessary activities. In order to look to the future with confidence and to ensure continuity, companies have to give more importance to customer profitability analysis.