The cost of labour is significant for many organisations. The planning, management and accounting of labour costs must be accurate, timely and often detailed for businesses to run effectively. The electronic systems employed by organisations to record and manage labour costs must meet a variety of demanding requirements – particularly from the perspective of payroll, costing and billing.
The management team – particularly the business unit and cost managers are most interested in labour costing. They are focused on monitoring the allocation and recovery of these costs. Costing will be impacting service contracts and the ability to invoice customers based upon costs.
In simple terms it is the allocation of labour costs to receiver cost objects. While the concept of labour costing appears simple, there can be a multitude of challenges in achieving the levels of accuracy, timeliness and detail demanded by most organisations. While the list of specific challenges can be many and organisation-specific, the main challenges may be grouped into time recording, cost valuation and reporting.
Click here to read the full article in the May 2010 edition of Inside SAP.
