With the development of the market economy, contracts play an increasingly important role in business transactions. As an important part of contract management, the performance cost and acquisition cost of the contract are also important factors that enterprises need to consider when signing and executing the contract. This article will provide a comparative analysis of the cost of contract performance and the cost of contract acquisition, and their differences and connections.
1. Contract performance costs.
Contract performance costs refer to the costs incurred during the performance of the contract, including direct costs and indirect costs. Direct costs refer to the costs directly related to the contract, such as procurement costs, labor costs, material costs, etc.;Indirect costs refer to costs that are indirectly related to the contract, such as administrative expenses, selling expenses, etc. The purpose of contract performance cost is to fulfill the obligations agreed in the contract, meet customer needs, and achieve sales revenue.
2. The cost of obtaining the contract.
The cost of obtaining a contract refers to the cost incurred in the process of obtaining a contract, including the cost of market research, negotiation and the cost of making bids. These costs usually occur before the contract is signed and are the price that the business must pay in order to obtain the contract. The purpose of contract acquisition cost is to successfully acquire the contract and achieve sales targets.
3. Distinction and connection.
1.Time of incurrence: The cost of contract performance occurs during the performance of the contract, while the cost of obtaining the contract occurs before the contract is signed.
2.The purpose of the contract performance cost is to fulfill the contractual obligations, meet the needs of customers, and realize sales revenue;The purpose of contract acquisition cost is to successfully obtain the contract and achieve the sales target.
3.Different cost control methods: For contract performance costs, enterprises need to reduce costs through refined management and control of direct costs and indirect costsAs for the cost of obtaining contracts, enterprises need to reduce costs through market research, negotiation skills, bidding documents, etc.
4.The accounting treatment is different: contract performance costs are usually recognized as current expenses or assets in accounting, while contract acquisition costs are usually recognized as current expenses in accounting.
5.The risk bearing is different: the cost of contract performance is the cost that the enterprise must bear to perform the contract, and its risk is small;The cost of obtaining a contract is the cost incurred by the enterprise in order to obtain the contract, and its risk is relatively large.
6.Different evaluation criteria: For the cost of contract performance, the evaluation criteria of the enterprise are usually the profit margin and yield of the contract;As for the cost of contract acquisition, the evaluation criteria of the enterprise are usually the contract signing rate and gross profit margin.
To sum up, there are obvious differences between contract performance costs and contract acquisition costs in terms of occurrence time, purpose, cost control methods, accounting treatments, risk bearing and evaluation standards. Therefore, when signing and executing contracts, enterprises need to fully consider the difference between these two types of costs, and adopt different management strategies and control methods to achieve better cost control and profitability.