With so much constantly going on and so much to worry about, running a business is hard. It can be especially difficult to take a step back and think about strategic growth – and time-consuming to even gather all the facts and figures that will allow you to do that.
Management accounting is one solution to the problem. As opposed to annual accounts, this form of financial management is more frequent – usually quarterly or even monthly – and focuses on data that will help you make good decisions in the moment.
But businesses that practice management accounting overlook an especially useful tool that will help them make even better and quicker decisions – management accounting software. Let’s look at how such technology could help your business.
Management accounting in detail
As we mentioned above, management accounting is a form of frequent financial management. Specifically, it involves the collection, analysis and presentation of financial information that managers and senior stakeholders – hence ‘management’ accounts – use to make decisions. Unlike annual accounts, which mostly look backwards to check for compliance, management accounts look forwards.
Your management accounts, traditionally produced by a financial expert within the business or an external accountant, are made up of a range of components. Which ones are included comes down to your needs and wants as a business, but you absolutely want to have an income, cashflow and balance sheet. You’ll then want to analyse the array of figures and compare them to your key performance indicators (KPIs) to assess where you are and whether you’re heading in the direction you want to go in.
What is management accounting software?
‘Management accounting software’ is actually a bit of a misnomer – type it into Google or Bing and you won’t see any specific offerings. That’s because it isn’t its own thing but a feature of wider cloud accounting software. So, what’s that?
Cloud accounting software is technology that you can use to track all your business financials. The ‘cloud’ part of the name refers to the fact that all your data will be securely stored on the internet. That simple fact comes with three huge benefits that will also affect your management accounting:
- You can automate processes: Cloud accounting software such as Xero uses the power of AI to automate processes. For management accounting, that means you won’t have to spend the time gathering and presenting the data yourself – your software will do it all for you!
- Your data is displayed in real-time: Every time you make a change in your account, your dashboard will be instantly updated to reflect that change. And seeing how you can connect your software to your point of sale and accounting for expenses is as easy as scanning an invoice or receipt, the data – and therefore your management accounts – you see will be as close to reality as you can get.
- You can access your software from any internet-connected device: Many cloud accounting companies offer their services on mobile apps that work just as well as their desktop counterparts. So, you can access your data and management accounts no matter where you are!
So, management accounting software cuts out the need for an accountant?
Well, no. Management accounting software does not cut your accountant and accounting fees out of the picture – unless you’re comfortable with interpreting complicated financial data and don’t think a second, unbiased opinion on your conclusions is important.
With their financial analysis skills and experience in business advice, accountants are the perfect partners to consult on your management accounts. They may be able to spot opportunities and challenges that aren’t obvious to you or other stakeholders. They’ll also be able to help guide your overall strategy and provide confidence in your decision-making.
Management accounts do nothing for your business except report data – the value they bring is in your interpretation of the facts and figures, and the decisions you then make based on them.
Talk to us for expert assistance with your management accounting software, analysis of data and overall business strategy.
