Whether you want to make futuristic growth strategies for your business or you want to scale up your virtual accounting services – you have to empower your business with the management reports. This is a pristine instrument in the hands of accounting professionals to evaluate the current value and position of their clients’ business every month.
Today, if you want to increase the efficiency of your online accounting services, then you require real-time information about your clients’ various financial resources and without the proper management reports – it’s not possible.
What is Management Reporting?
Management reporting is an internal process to evaluate the overall company’s financial strength focused on profit and lose determining factors. With the management reports, you can dive deeper into the financial drivers of a business entity. These reports offer an insight into the specific area of a business so that effective business strategies can be formulated to take timely actions. The managerial reporting might not be mandatory or abide by the law, but to understand the performance and strength of different business departments – getting management reporting is the must.
CapActix has been providing an astonishing outsourcing accounting service to small business enterprises for a pretty long time now and we always emphasize on developing the management reports. The well-structured management report is the key to focus on the profits and losses amongst your clients, products, geographic regions, and even the company’s departments. Thus, it is highly advocated by professionals to get at least following management reports –
• Cash Flow
This report highlights the monthly cash transactions as well as bank transactions including the expenses along with receipts. It is a statement of cash inflows and outflows of a business entity for the significant time frame. When a business owner knows the difference between accounts receivable and accounts payable, then the exact liquidity position can be determined.
• Balance Sheet
It is a summary of all the assets, earnings, and liabilities of a certain company. To aware your clients about an accurate market position, these online accounting services are provided by the accounting firms. The exact worth of a company can be interpreted by the setting of assets from the liabilities. This report is essential for all types of business organizations to compare assets and liabilities with one another.
• Profit & Loss
This accounting report is created by adding incomes from sales and daily expenses in two separate columns. With this report, all the expenses can be categorized into particular expense heads. This is a yearly report to find out the net profit made by a company. However, in some cases, quarter to quarter or month to month basis statements should be created. To know the exact profit and loss position of your client’s company, you should frequently provide P&L.
For the sales department, it is important to create sales reports to gather information about the invoices raised in the past month and fluctuation in sales compared to the previous month and previous year. It is very important for the sales department to identify the reason behind changes in the sales figure and make the sales strategy.
• Miscellaneous Reports
There are plenty of other management reports that can be generated as per the requirements of different businesses such as trade creditors, trade debtors, aging analysis, ratio analysis, stock analysis, and so on.
Significant Questions Addressed by Management Reports
There are a plethora of management reports present for accountants to tweak with, but not all the reports are adequate for every business organization. A good managerial report is something that provides useful financial information along with some specific input to make strategic decisions. One managerial report can be considered perfect when it can answer the following significant questions –
Question 1. What is the cash flow status of a firm?
The management reports should show the figures related to the current liquidity status of the company. The knowledge of the cash inflow and outflow of a company shows the actual market position. If a company has more accounts payable, then accounts receivable – it is an indication of a bad cash position. Thus, with adequate information, swift actions can be taken to improve the cash structure of the company. Moreover, a cash flow statement should answer numerous layers of cash such as cash in hand, cash in the bank, debtors, creditors, and so on.
Question 2. How much money has moved in and out of business?
If a management report won’t show the figures regarding the incoming and outgoing money, then you can’t call that report a complete. The management report should state how much income has been generated and spent by a company during a particular period. This will answer whether the company’s expenses are covered by the income or not. Now, if the incoming flow isn’t sufficient enough to cover the outflow, then this is a warning bell for a business organization.
Question 3. How much profit and loss have been generated for a timeframe?
Business is commenced to make profits so it is essential to know about the profit and loss statement of the business. Management report should provide the minute information about the income and expenses for a particular period to fathom whether the period has been profitable or not. If the things are not in the favour, then management can find causes of loss from the integrated report.
Question 4. Where does a company stand in the market?
If your clients want to know the current market position of their company, then your management report should state the data immediately. You should maintain the account of all the assets, liabilities, and the equity of your clients so that the market value of the company can be interpreted anytime. With adequate market knowledge, you can suggest innovative solutions to your clients to improve their market position. The major financial loses can be avoided with the knowledge of a company’s financial stability.
Question 5. How much receivable and payables have been gained in the given timeframe?
When a management report addresses all the questions related to the account receivable and payable, then you can interpret whether your client should borrow more money from the market or not. If the account payable is increasing rapidly as compared to the account receivable, then you should advise your clients to immediately pay them. With the adequate knowledge of receivable and payable accounts, the liabilities of companies can be reduced on time.
Reporting Is The Must
For the progressive accounting companies who always want to provide the perfect accounting services to their clients by minimizing their financial risks – it is vital to prepare management reports. With the comprehensive reports, accounting firms can provide information about profit/loss, receivable/payable, assets/liabilities, and overall cash flow structure of the organization to make effective business decisions.
If you want to generate highly comprehensive and informative management reports, then you can connect with CapActix on email – [email protected]. or can call on +201-778-0509.