Financial Reports vs. Management Reports: What's the ...

Financial reporting is compliance-oriented and is used for external purposes. · Management reports are great for CEOs to gain insight into specific areas of ... Haveaquestion?Callus 877-735-7693 CAREERS ClientLogin Upload Pricing Services WhatWeDo ControllerServices AdvisoryServices ManagementAccountingServices AdvancedBookkeepingServices AboutUs Team&Technology ClientTestimonials FAQs PR/News Partnerships Blog Podcast Search FinancialReportsvs.ManagementReports:What’stheDifference? ByGrowthForce | KPIs,Financial&ManagementReporting      4minread Mostbusinessownersarefamiliarwiththebasicfinancialreportstheyshouldbegettingmonthly,butmanyarelessfamiliarwiththekindsofmanagementreportsavailablethatcouldhelptheirbusinessesincreaseperformanceandprofitability. KeyTakeaways Financialreportingiscompliance-orientedandisusedforexternalpurposes.Itencompassesthestandardweekly,monthlyandquarterlyreportsthatcompaniesreceiveeachmonth ManagementreportsaregreatforCEOstogaininsightintospecificareasoftheirbusiness.However,youwanttomakesureyouaregettingtherightreportsthatyourbusinessneedstodrivestrategicdecision-making.   AstheCEOorowner,doyouhaveinformationavailableathandtoanswerthesequestions:      AmIpricingmyjobsright?      DidImakemorethisquarterthanlast?      Whoaremymostprofitablecustomers?      DoIhaveenoughcashtomakepayroll?      Whoaremymostandleastproductivestaff? Imagineyourbusinesspotentialifyouhadalltheanswerstothesequestions!Youwouldn’thavetoguessaboutwhereyoustandorhowtoimprovetheoperationofyourcompany. Howwouldyouanswerthosequestions?Hint:BylookingatbothyourfinancialANDmanagementreports!Mostbusinessownersdon’tunderstandthedifferencebetweenthetwo…solet’sreview. WhatisFinancialReporting?   Financialreportingiscompliance-orientedandisusedforexternalpurposes.Itencompassesthestandardweekly,monthlyandquarterlyreportsthatcompaniesreceiveeachmonthwhichinclude:      ProfitandLossStatement      BalanceSheet      AccountsPayable      AccountsReceivable      StatementofCashFlows Thesereportsaremandatoryforallbusinesses.Banks,investors,andregulatorsusethesereportstoapproveloans,linesofcreditandtomakesureyouarefollowingGAAP(GenerallyAcceptedAccountingPrinciples). Thesereportsreflectthefinancialstandingofyourbusinessataspecificpointintime.Theyshowtheoverallpictureofhowyourcompanyisperformingbutdon’tgiveyourealinsightintothespecificsofyouroperations.Theylookbackwardanddon’treallyinformyouonhowthebusinessmightperformnextmonthornextquarter. WhatisManagementReporting?  Youwillbeabletodivedeeperintothefinancialstandingofyourcompanythroughmanagementreportswhichconsistof:      ProfitandLossby Class-Department,Team,Job    RealizationRate         UtilizationRate Unlikefinancialreports,managementaccountingisnotmandatoryandisforinternaluseonly.Yourcompanydoesn’thavetofollowGAAPguidelineswhenproducingthereports. Insteadofanoverallevaluationofthecompany,managementreportingisfocusedonsegmentsofthebusiness.Bysegmenting,youcangetintothedetailsandanalyzethedriversofyourbusiness. AnexamplewouldbeanalyzinghowtheMarketingDepartmentisperformingforacertaintimeperiod,orhowmuchprofitoneSalesEmployeehadacertainmonth.  ManagementreportsaregreatforCEOstogaininsightonspecificareasoftheirbusiness.However,youwanttomakesureyouaregettingtherightreportsthatyourbusinessneedstodrivestrategicdecision-making.Youdon’twanttoputtheworkintopullingreportsthataren’tbeingactedupon.  WhyYourBusinessNeedsBothFinancialandManagementReports Somebusinessesonlywanttoproducefinancialreportseachmonthformanyreasons.Wehearbusinessessay“Itcostsextraformanagementreporting;wedon’thavetimeforitandIdon’tthinkitwillhelpmybusiness.” Ifyoudon’treceivemanagementreportingeachmonthyoucouldbemissingoutoninformationthatcanhelpyourcompanygroworpreventyoufromimplementingcostlyprogramsthatdon’tprovideanROI. Yourbusinessneedsfinancialreportingforcompliance,makingsurethenumbersareaddingupandtopreventcashflowproblems.Youalsoneedmanagementreportingsoyoucanmakebetterbusinessdecisionsbackedbysoliddata. HereatGrowthForce,wegobeyondjustbookkeepingandaccounting.Weprovidecriticaloversightandaccountmanagementtoensurethattherightpolicies,proceduresandsystemsareimplementedandaccuratefinancialandmanagementreportsareproduced.Wehelpbusinessesrunwithtotalconfidencebackedbyfinancialandmanagementreportingtheycandependon. WhenyouworkwithGrowthForce,youcancountonaccurateandup-to-datebooks.Basedonyourcompany’sneeds,wewillenterthefinancialdataonaweeklybasisandcloseyourbooksatmonth-end. Weareexpertsinfinancialandmanagementreportingandcanprovideyouwiththefinancialintelligenceyouneedtomakeconfidentdecisionstohelpgrowyourcompany.   RecentBlogPosts HowtoImproveYourCashFlowDuringInflationaryTimes Readmore WhatRiskManagementIsandWhyIt'sImportant Readmore WhatEveryArchitectureFirmNeedsToKnowAboutAccounting Readmore PrevPost NextPost SubscribeHere! 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