Relationship between service provision and finance function

Question 1

charge-out rates

Answer 1

This is the hourly rate which the company charges clients. It
should be higher than the salary, as it should include a share
of overheads, for example training, and any profit the
company wishes to make. However, if the charge-out rate is
too high customers will not use the service.

Question 2

estimating costs

Answer 2

Problems arise in determining the amount of overhead to be
included in the charge-out rate. Also, if the service takes
longer to provide than expected, the company may not be
able to pass on the extra cost

Question 3

Problems measuring benefits

Answer 3

Market conditions may mean that the charge-out rate contains
a very low profit element. The company may question
whether it is worth carrying out these services. The problem is
that the benefits are intangible and not easy to measure, but
nevertheless real. A company with effective service provision
has happier customers, and happy customers are more likely
to buy from the company in future, therefore leading to lower
selling costs. But it is very difficult to measure these benefits