In general, business owners understand the importance of the usual monthly financial reports, but many aren’t familiar with management reports. Namely, there are various kinds of management reports that are very helpful and beneficial for increasing profit and the overall performance of a business.
So, in order to get the most out of management reports, you’d better contact Latitude 12 – one of the best business management agencies based in Darwin which provides tailored managed business services to its clients in remote and regional Australia.
Now, let’s have a look at the difference between financial processing and management reporting:
- Financial Reporting
As the CEO or business owner, you are probably already familiar with the concept of financial reporting and that this is used for external purposes only. And, you must know that companies receive financial reports on a weekly, monthly and quarterly basis. These reports include the company’s profit and loss statement, both accounts payable and receivable, balance sheet, and statement of cash flows.
But, why are these reports compulsory? Indeed, all businesses need these reports if they want to get loans and lines of credit by banks or investors. Plus, financial reporting is mandatory if you want to follow the law and the Generally Accepted Accounting Principles (GAAP).
Financial reports show how your business is performing and the businesses financial status at a certain time. However, they only provide information about the past and not actually about how your business may perform in the future.
- Management Reporting
Contrary to financial reporting, business management accounting isn’t compulsory and used for external purposes. In other words, you as an owner or the CEO should decide whether you want to deal with management reporting since it’s only for internal use.
So, why should you decide to dig deeper into the finances of your business through management reports? The answer is simple – you will get detailed information on every segment of your business, not only the general picture as in financial reports. And, by having access to such details you will be able to determine what works and what doesn’t work for your company.
Management reports should give CEOs insight into different areas of the business and should include information on profit and loss by class, realization rate, utilization rate, department, job, and team. Hence, in order to get the best out of management reports, make sure you analyze them before making any strategic decisions.
Even though business management reports aren’t mandatory and may cost you some extra money and take more time, they are worth it. Management reporting can provide insight into business solutions and steps your business should take in order to improve, grow, and reach the next level.
Here at Latitude 12, through strong partnerships and our shared services model, we deliver high quality and affordable services that you may not otherwise have access to. So, don’t hesitate! Give us a call and ensure your business gets the best financial and management reporting to help your business grow.