Why do I need a management accountant?
Firstly, it is important to understand what a management accountant is and how this differs from the more traditional financial accountant. A management accountant will provide on-going reports into the operation of your business, enabling you to make strategic decisions. A financial accountant provides you with end of year reporting, showing you what has happened over the previous year. A management accountant can generally produce the financial reporting as required by HMRC, but a financial accountant will not necessarily offer the services of a management accountant.
While there are many great reasons to use a management accountant, we have picked out three top reasons why we think you should use one.
1: Strategy with insight. Using a management accountant enables you to make strategic decision based on an in-depth knowledge of your company and its financial health. Trying to make decisions without understanding what is happening now, can be a little like playing pin the tail on the donkey.
2: Problem prevention. Do you want to know at the end of the financial year that your business is in trouble, or would you rather know as it begins to turn downhill? Knowing at the end of the year, means having to work your way all the way back up through the months of downhill trajectory. Being told as it happens, often means that a few simple changes can halt the downwards slide before it picks up too much pace, saving you energy and money.
3: Ability to change. If you know exactly what is happening, you have the opportunity to change it. If you don’t know, you can’t change anything. Management accounting covers all aspects. If you want to know how many units your workforce produces over different times of the day, management accountancy can tell you that. Armed with knowledge you can implement a change and track the result. For example, if your productivity always drops off at a certain time, why not see if changing the time of the breaks, helps to improve productivity.
In essence a financial accountant’s main role is to produce information required by external parties such as HM Revenue and Customs and Companies House, and concentrates on measuring historical financial information. A management account on the other hand will be at least as focused on measuring the results of activities such as the number of items produced per hour of labour or machine time, the effectiveness of a marketing campaign, whether or not to buy that nice shiny new piece of equipment and what changes in the way you work will help you improve your business performance. Their focus is on changing results for the better and not just reporting historical results.
If you want to work with an accountant that will help you to get the most from your business, why not come to TLA Business Services? We provide management accounting which delivers on-going support for you and your business. Call us today to arrange your meeting on 01905 21411