A guide to management accounting for business owners
Management accountants have a strategic role. They’re also known as virtual chief financial officers (VCFOs), and act as an outsourced accountant for multiple businesses at one time.
A hybrid of a business coach, financial advisor and colleague, they work with you to help your business. They’ll make sure you’re on the right track and don’t miss opportunities. There’s a lot of value to be found by working with management accountants.
So what do management accountants ‘manage’?
- Risk. Training staff and then implementing standards manages and reduces risk.
- Reports. Management accounting reports help business owners and managers monitor the company’s performance periodically.
- Strategy. Implementing a competitive strategy for a business using the cloud helps develop better product and service costs.
- Forecasting. Helping you plot a path for your business’ future, forecasts help you make informed decisions.
- Scenario planning. A process designed to show you possible outcomes of decisions, it’ll help you think of ways to reduce risk.
What’s the difference between financial and management accounting?
Typically, financial accountants prepare historical reports. These are based on past performance, which doesn’t always help businesses take the next steps.
Management accountants analyse the figures in said reports They’re future-focused, usually relying on forecasts to show where a business currently stands, and where it is heading. This helps businesses make better decisions and promotes growth.
How can management accountants help your business?
Their data-driven approach to decision-making means more often than not you’ll improve the health of your business. Management accountants give you insight into how you’re performing and what you can do to improve.
They’ll probably save you money too. If you’ve looked into employing a CFO you’ll know it’s a big investment. SMEs may find a bookkeeper is a more affordable choice. Because many management accountants are freelance, they’re a middle ground – you’ll only pay for what you use.
Using actual figures they’ll put together a forecast, predicting the ups and downs you’re set to experience financially throughout the next set period.
“Working a 70-hour week means you’ll often put off your finances. When you finally get round to it at 10pm on a Sunday, your brain is fried and the numbers stop making sense. So you could be making decisions based on errors.
As a management accountant, I use Futrli to automate tasks for people, based on solid infrastructure built to not let errors creep in. That’s why Futrli and management accountants are the most solid investments you can make as a business owner.”
– Daniel Killoran, Futrli Management Accountant
Learn your standing and how to improve
Your management accountant will be able to compare your standing against others in your industry using benchmarking. This gives you an idea of how you can progress, and your advisor will help you create a strategy to achieve it.
They’ve likely worked with a business similar to yours. Be it in industry or size, they’ll know which strategies work. A management accountant’s key goal is to add value to your business. They’ll teach you how your company makes its money and how to capitalise on it.
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