Financial Reports vs. Management Reports: What's the ...
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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! Services BookkeepingServices AccountingServices ControllerServices Pricing ReSOURCES Podcast Blog Webinars HowItWorks AccountsPayableProcessing AccountsReceivableProcessing AccountReconciliation PayrollProcessing CashFlowForecasting ManagementReporting SalesTaxProcessing DocumentManagement InternalControls Month-EndClose JobCosting KPIScorecards AboutUs PRNews Partnerships ClientTestimonials FAQ's CPA/CFOAFFILIATES CAREERS CONTACTUS GrowthForceisnotaCPAFirm. 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