Discovering Real Profitability in an Inflationary Environment: FidanYS Case Study
In today's global economy, businesses operating in countries where inflationary conditions are prevalent often struggle to interpret their financial performance accurately. While nominal profit figures can be misleading, accessing real (inflation-adjusted) profitability information is of vital importance. FidanYS was an innovative SME facing this challenge and looking to get a step ahead in the market. As acrtech, we are proud to have met this critical need of FidanYS and provided them with a significant competitive advantage.
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The Challenge Facing the Client: Invisible Profit Loss
FidanYS was an operationally successful and growing business. However, in a high-inflation environment, they realized that the profit and loss statements obtained through traditional accounting methods did not fully reflect the company's true financial health. Stock valuations, cost calculations, and general profitability analyses were becoming blurred under the constantly changing impact of inflation.
The main challenges of this situation were:
- Misleading Profit Figures: Although nominal profits appeared high, it was difficult to understand how much profit the company was actually making or losing due to the erosion in purchasing power.
- Accurate Pricing Decisions: Being unable to determine product and service prices correctly under inflationary pressure led to either eroding profit margins or a loss of competitiveness.
- Strategic Planning Difficulty: Decisions regarding future investment, growth, and financial planning had to be based on uncertain and misleading data.
- Market Competition: The fact that competitors were experiencing similar difficulties, but FidanYS was seeking a concrete solution in this regard, created an opportunity for differentiation.
FidanYS was looking for a clear solution to this "invisible profit loss" problem; they wanted a system that would show the real financial situation and provide them with a tangible competitive advantage in the market.
What Strategy Did We Follow and What Solutions Did We Offer?
As acrtech, we initiated an in-depth analysis process to meet this critical need of FidanYS. We determined that existing inventory management and ERP (Enterprise Resource Planning) systems ignored the inflationary effect. Our goal was to offer FidanYS an integrated solution that would show not only profit and loss figures but also the real value of these figures against inflation.
The strategy we followed and the solutions we developed:
- Detailed Needs Analysis: We examined FidanYS's current financial processes, stock valuation methods, and reporting needs in detail. We identified in which areas inflation was most effective.
- Customized ERP Module Development: In addition to the existing ERP infrastructure, we designed a special module containing inflation accounting principles. This module could automatically adjust product costs, sales revenues, and general expenses according to current inflation rates.
- Real-Time Data Integration: We provided an integration to receive inflation data from reliable sources in real-time. In this way, all of FidanYS's financial metrics could always remain up-to-date.
- Nominal and Real Profit-Loss Reporting: The system began to present both nominal and inflation-adjusted (real) profit-loss reports simultaneously. These reports provided a critical perspective for FidanYS managers to make accurate financial decisions.
- Training and Support: We provided comprehensive training and continuous support to teach the developed system effectively to the entire team and integrate it into operational processes.
What Concrete Results Were Achieved at the End of the Project?
This customized solution we developed for FidanYS as acrtech created a distinct transformation in the company's financial management and its position in the market:
- Real Profitability Became Visible: FidanYS could now clearly see the real profitability rates behind the "fog" of inflation. In this way, they could understand in which product groups or services they were truly making a profit, and in which ones they were actually losing money despite the appearance of nominal profit.
- Smart Pricing Strategies: Thanks to real costs and profitability information, FidanYS developed much more accurate pricing strategies for its products and services. This allowed them to both protect profit margins and remain competitive in the market.
- Strong Competitive Advantage: They stood out from their competitors in the inflationary market as a company capable of performing "real profitability" analysis. This capability also increased their confidence in the eyes of investors and business partners.
- Improved Operational Efficiency: The accuracy and transparency of financial data helped FidanYS manage its operational processes more effectively. Resource allocations and budgeting decisions were made much more consciously.
- Stronger Strategic Planning: Future investment, growth, and risk management plans could now be built on solid and reality-based financial data.
This success of FidanYS is concrete proof of acrtech's ability to offer in-depth needs analysis and innovative solutions tailored to SMEs. If you think your business is facing similar challenges or if you want to gain a competitive advantage by interpreting your financial data more accurately, do not hesitate to contact us.