Advantages of cost control

Answer 1

n many cases, a company will choose to implement cost control procedures. These procedures can take many forms but will generally place limits on how much money employees can spend, keeping them to strict limits. In addition to reducing the amount of money the company uses on outside expenses, these controls have a number of ancillary benefits.

Lower ExpensesThe chief benefit of cost controls is that they lower the company's overall expenses. By limiting the amount of money employees can spend, the company places a cap on how much money can go out the door. This allows the company to keep more cash on hand, or to invest larger amounts of money in other ways, such as in capital expenses or paying down debt. Less AbuseIn addition, by placing limits on how much money employees are allowed to spend, the company is taking steps to limit potential abuse by employees. If an employee is given a strict limit as to how much he can spend on a particular project, he may be less likely to spend money on unapproved activities, as he will not be able to meet his primary tasks. Better RecordsAn ancillary benefit of cost control is that it facilitates accounting and helps financial planning by setting a limit on a company's costs. By knowing how much the company will be spending in a particular period, managers can better plan a budget. In addition, once the money has been spent, it will be easier for Accountants and planners to determine how the money was spent. Atmosphere of ThriftWhen a company places cost controls, it also indicates to employees that it is actively seeking to save money. This may help encourage an atmosphere of thrift in other areas of the company as well. In fact, in some cases, the employees may choose to bring expenses in below their set limit as a means of helping the company meet its fiscal goals.

Answer 2

This system can help management to stay on top of workplace situations. They will be able to see what is going on and better make decisions on how to act.