financial management

Explained: Management Accounting VS Financial Accounting

Accounting is an essential tool for any business. However, one must differentiate between financial and managerial accounting because they provide different types of information and serve different objectives. Below are the 5 ways that show how different they are.

What is the difference between financial accounting and managerial accounting?

End Users

External stakeholders, such as stockholders, lenders, financial analysts, and others from outside the company, are normally the ones who make use of the financial statements produced by financial accounting.

On the other hand, management accounting reports provide data that can be used by internal decision-makers such as the managers of the company.

Objectives

The purpose of creating financial statements is to provide external stakeholders with an accurate report on the financial health of the company. For example, these statements are essential for lenders to determine the credit-worthiness of the organization. Potential investors also want to see the profitability of the company before they invest. Further, these financial statements are also required to be submitted to government agencies such as the Securities and Exchange Commission.

The managers of the company need data that they can use in order to make decisions regarding the day-to-day operations of the business and this is where management accounting reports are beneficial. Budgets and costing, for example, help managers determine how a specific department is performing and if they are contributing to the achievement of the company’s overall goals. They also help management identify possible areas for improvement.

Information

Financial reports present data on the company’s financial health and performance over a specific period of time. The most common financial accounting reports include the Balance Sheet (which lists the company’s assets and liabilities), Income Statement (which details the company’s revenues and expenses) and Statement of Cash Flow (which shows how cash and cash equivalents are affected by changes in the balance sheet and income statement).

While financial reports require exact numbers, management accounting reports do not. Instead of just using data regarding past performance, they are also based on current trends and forward-looking forecasts. The typical management accounting reports include Sales and Revenue Forecasts and Budget Forecasts.

Guidelines

Management accounting is based on business needs and is more flexible in that it does not need to follow any specific structure. On the other hand, financial accounting is more rigid and must adhere to the Generally Accepted Accounting Principles (GAAP).

Frequency

Management accounting reports are usually prepared on a weekly or monthly basis by managers or business analysts. Financial accounting reports are filed annually. The annual reports must also be made part of the public record for publically traded companies.

Maximize management accounting and financial accounting for your business by partnering with a credible and trust-worthy accounting outsourcing company.

Managing your business’ finance and accounting on your own is taxing and does not always result in favorable results. With our customized solutions, rest assured that all your concerns would be addressed accordingly and at the same time, it would allow you to concentrate on other important factors vital for your company’s growth. Learn more!

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10 Must-Read Blogs on Financial Management

Having sound financial management know-how will help you not only in handling your personal accounting but also allow your business to grow and expand. It includes overseeing financial resources through planning and organization aside from simply keeping accounting books.

Get Ahead in Business with Finance and Accounting Outsourcing | Infinit-O

We have gathered 10 must-read blogs on Financial Management that will help you learn more about handling your finances and other techniques about accounting.

1. CPA Success

If you want to improve and expand your business or simply learn tips from business experts, CPA Success is an excellent resource to go to.

2. MintLife

MintLife provides a fun and practical ways to manage your personal finances. From how to maximize your budget to be more adept in saving, you can count on this blog.

3. Seth Godin’s Blog

Who doesn’t read Seth Godin? If you don’t, you better. Seth Godin is an author and a public speaker on accounting and marketing. And while you can learn a lot from the books he has written, you can gain a lot of knowledge also from reading his witty remarks on his blog in a more personal and amusing note.

4. Taxable Talk

Need to be up to date with financial events, legislation, and theories? Read news and commentaries straight from Russ Fox, E.A., of Clayton Financial and Tax of Las Vegas, NV & Bethesda, MD.

5. Dave Ramsey

Sought after financial advisor, Dave Ramsey shares his knack about how to manage your finances and grow them. He offers workable advice from keeping a doable family budget to being debt-free. Videos of his TV show, budget tools, and Dave’s finance classes are also provided on this website.

6. ClockWork Accounting

ClockWork Accounting is a good reference for anything accounting-related such as accounting software, accounting services, degrees, etc. So if you need to be up to date accounting-wise, bookmark this website now.

7. AccMan Pro

With more than 30 years of IT-related finance experience, Dennis Howlett is a reliable resource in this field. In this blog, he shares his knowledge to guide you in growing your business.

8. Harvard Business School Working Knowledge

This website is a forum where innovative business practices are offered by Harvard faculty themselves. They also discuss known concepts and issues in management practice and provide inspiration for leaders in their respective fields.

9. Tax Domme

Tax Domme is a blog where your tax proficiency is not intimidated. It gives great advice about tax and other related topics that is understandable by all levels of readers.

10. Accounting Observer

You may read updated financial current events and other information about accounting from this blog. So if you want to know what’s up in the financial realm, read the Accounting Observer.

Have you been following any of these blogs? If not, you’d better be! We’re looking forward to hearing your experiences from these blogs. You can also share your favorite Financial Management blogs in the comments section below!

Managing your business’ finance and accounting on your own is taxing and does not always result in favorable results. With our customized solutions, rest assured that all your concerns would be addressed accordingly and at the same time, it would allow you to concentrate on other important factors vital for your company’s growth. Learn more!

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3 Best Practices for Improving Financial Management Reports

Financial management reports can cover anything from income statements, profit and loss summaries, and tax filings to retained earnings. Regardless of what you plan to cover in the next report, your business will need an efficient system that goes beyond presenting these details in an organized manner. You want to also improve the decision-making and responsiveness that arises from the report. You want stakeholders to act according to your findings and view the information provided as useful in the long run.

Profit and Loss Management: 3 Ways to Do it Right

Financial reports are a good indicator of the health of a company. You need to not only show how each financial aspect performed but also what has helped drive these forces, such as sales or marketing. Specific information such as revenue from your operations or how you can improve your company’s total assets can be sought after at the end of your plan. 

How then can you improve the company’s reporting to ensure a clear, efficient, and effective presentation? Check out these three ways to improve your financial management reporting.

Infinit-O Goals for Financial Management Report Outsourcing Blog

1. Have a Goal in Mind.

A report that tries to cover everything ends up discussing nothing. Before you head into drafting that financial management report, think first with an end in mind. You can go over a few questions to draw out a specific answer. Do you simply want to express your company’s overall revenue and expenses? Do you need to budget the expenses in the coming year? Do you need to see how the business financially grew based on its key drivers? These are just some of the questions you can consider when planning a report on the upcoming goals and plans for your business. From there, you can articulate an umbrella goal that will clarify and specify what your report hopes to achieve.

Infinit-O Infographics Graphs and Charts for Financial Management Reporting Blog

2. Maximize Visuals.

A financial report with images and charts helps your readers visually summarize and explain financial data. You want to give your business stakeholders clear and easy-to-comprehend visuals you want to present. Utilize infographics, pie charts, and other illustrations that can summarize the important points. Make sure the text and the visuals work hand in hand to tell the story of your data. Having a story in mind ensures that the goal of the report is maintained as you take the reader through the report’s information.

Infinit-O Simple Document Financial Management Reporting Blog

Make sure all elements work together so the report is readable. Stick to a color palette and use it consistently across the different pages. Otherwise, all the effort you made in ensuring consistency in the data and different information will be useless if they all don’t look good together.

Keep Everything Clear and Simple

3. Keep Everything Clear and Simple.

You’ll end up alienating your CEO or managers if the data and strategies presented are hard to follow and understand. Apart from using a color palette, keep in mind the basic design principles that will make sure the information reads clearly every time. Use white space to balance elements, stick to colors that are easy on the eyes, and make sure to use readable fonts.

The language should also avoid anything that remotely resembles corporate language and management speak. This just drowns out your message and makes your report’s goal less apparent. You want every word and the sentence completed to be clear, honest, and straightforward. Avoid resorting to jargon, keep the language simple, but never talk down to your reader.

For small businesses, creating a comprehensive financial management report can be time-consuming and eat into the hours they can spend on growing the company. Outsourcing provides a cost-efficient solution that enables managers to focus on their business and still have expert teamwork on the management report that covers bank statements, profit and loss summaries, tax filings, and other crucial information. 

Companies like Infinit-O can build you a dedicated team of market and financial analysts to complete a clear, straightforward, and goal-oriented management report on your finances. The outsourced team will spend the time you don’t have, ensuring that stakeholders have all the information they need in order to make the right business decisions to move their company forward. This leaves you to focus on your core tasks such as producing the right products or services, delighting your customers, and increasing your revenue. 

Infinit-O is a trusted F&A solutions partner that can help you build and operate a dedicated team of accounting professionals of every level including certified public accountants designed specifically for your unique needs, with cost savings of up to 70%. We can help you meet your goals, whether they be growth, better productivity or simply bottom-line cost savings. With access to excellent talent who use cutting-edge technology, we provide some of the best strategic solutions for your business. We are ISO-certified and GDPR-compliant, so your company and client data are safe with us.

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