Throughput Accounting

Throughput Accounting asks owners to find the one part of the business that is holding everything else back. It also explains why cutting every cost can make a company look efficient while leaving it less profitable. I like the focus on the whole system because departments often improve their own score and accidentally hurt the business. The accounting theory may feel like more machinery than a small service company needs. The practical lesson is much simpler: fix the bottleneck before polishing everything around it. Buyers value a company that knows how work moves, where it gets stuck, and how to improve it.