Why Are Management Accountants So Important for Businesses?
Posted on 18th August 2017 in Business
Written by Freya Hughes
If only more accountants were more Superman than Clark Kent… We all need a hero who’ll go above and beyond for our ventures, and that’s why Management Accountants are so important for business. Understanding the ins and outs of your business, they’re creative in strategy and natural problem solvers, and work almost as a member of your team. As the accounting industry is developing, you need to be aware of the myriad of additional services that have been brought to the table. With that in mind, here are the top three benefits Management Accountants will bring to your firm.
The main difference to get on board with between accountants is this: Management Accounting helps you keep your business running via strategising, while traditional compliance accounting keeps your company out of trouble with the taxman. Also known as advisors, the clue is in the name here – they’re here to help.
A fun part of running a business is watching your goals become reality. Creating and implementing your strategy, and reaping the benefits is very rewarding. If you’re focusing just on your results at year-end, you won’t have a clear view of which parts of your business need to be given extra attention. You must be constantly monitoring your business’ performance, in each department or section, to really understand how your company is progressing. Management Accountants are there to help you achieve this, helping you get under the skin of your company and understand how it is currently, and will continue to grow.
Hiring a Management Accountant, you’ll be armed with information which will impact your decision making for the better. They’ll set you up with a business forecast, which will help you navigate the peaks and troughs of running a business. Use this information to your advantage – you can make your business more successful by listening to your accountant’s advice, and watch it grow.
We spoke to our friends at Illumin8 Accounting firm, based in Australia, recently, and these guys are paving the way to Superman status. They show the business owners they work with their very own dashboards and results, so they can see how effective strategising and planning is. Illumin8 are the kind of accountants you should have, and these services are out there and waiting for you, so seek them out.
These are the top three benefits Management Accountants can (and will!) bring to your business:
1. Great return on investment
Many Management Accountants work on a freelance basis, so you can use their services only when you want or need them. This will save you a lot of cash compared to hiring an in-house finance team, and compared to employing a full time bookkeeper, and you’ll get a whole lot more for your money, as so many more services are offered. Freelancing allows advisors to gain vital experience in many fields, working across multiple industries. In turn, this will mean you’ll benefit from their font of knowledge, and will likely learn a lot from their prior experiences.
Your advisor should be in touch regularly – at least once a month – to check in on the progress you’ve made since your last meeting. A lot can change in your business at a moment’s notice, so a good rapport is essential.
Your Management Accountant will set up your figures into a forecast, so you can look ahead at what will (or might) happen next. Inputting your figures into FUTRLI will mean you can project the possible path of your company, years into the future. Having this powerful tool will allow you to make savings for quieter periods, and let know when to invest in new equipment, or more space. Forecasting is best practice if you’re looking to grow your company sustainably.
2. You’re able to strategise your next moves confidently
You advisor is employed to take an interest in where you stand currently, and where you’re headed. They should be asking you a load of questions to really understand you and your company. A great example of this is when we chatted to one of our partners – Martin Bown of My Management Accountant. His approach is to ask every client the following questions in the initial meeting:
- What was your forecast for last year?
- How did you perform against it?
- What are your sales targets for next year?
The amount of blank faces he is met with is worrying. Get in touch with a Management Accountant, as soon as possible if you don’t know what your figures are telling you – after all, how will you make informed decisions?
After your initial meeting with a Management Accountant, you should be ready to create and implement your business strategy. Using your budget is a great start to planning out your movements, but doesn’t allow you to plan how you’ll swerve obstacles that arise. Forecasting is the best way to make your business agile, so use both to keep a firm grip on your incomings and outgoings.
3. Problems can be solved before they grow
With any problem it’s better to nip it in the bud before it escalates. This is one key thing Management Accountants will help you to do. We know how it goes – you think you’re on track to hitting your goals and targets but, in some industries, the difference one sale makes can see you miss or surpass your goal.
While margins may always be tighter than you’d like, your strategy will allow you to sail past potential issues in your operations, while forecasting will help you jump hurdles that crop up financially.
The detailed analysis of your figures that a Management Accountant will provide means you can request additional support and information at a moment’s notice. Say a manager flags up a potential issue, one that could be avoided if you act fast enough. The way your accountant dives deep into your figures will allow you to take action before it snowballs.