Management reporting can be defined as a system of reporting key information related to the core business of a company for a particular time period. Professional advice from Strategic Accounting Solutions in setting up management reporting, and how to use it can be of great benefit to a company. It can help a business to link various financial and accounting systems via the cloud to provide optimal brand offerings (goods and services) to customers.
The Purpose of Management Reporting
Management reporting applications are designed to create a tightly aligned and integrated approach to business management. It should cover critical key performance areas (KPAs). The best system integrates contributions from different areas in one data base and provides integrated analytics which underlie good organisational decision making.
Problems with Management Reporting
“Four out of ten top decision-makers are dissatisfied with their management reporting.” This is the conclusion of Horváth & Partners in a 2013 study carried out among 142 companies from different sectors in Germany, Austria and Switzerland.
Problems Related to Management Reporting Itself
- No Management Reporting: Early in the life of a business records are often kept purely in the minds of those who work in the small business. Reports are done verbally on request at random times.
- Irrelevant management information reported: The leaders in the company may think they are making good decisions, but their decisions are inherently flawed because they are based on irrelevant management information.
- Too much information: This can cause lack of focus on key drivers of core business and key performance areas (KPIs). It slows down an organisation’s responsiveness to its customers and the environment.
- Management Information Silos: Business units can produce management reports in which common information is not shared. Lack of integration prevents holistic interpretation and integrated decision making.
Problems Related to Human Factors
The best management reporting system can fail due to personal agendas, problems related to management-staff relations and organisational culture.
- Secrecy: It can happen for many reasons, e.g. internal competition, jealousy (petty or professional), fear of negative impact of results.
- Lack of Training: The best management reporting system will fail if people don’t know how to input, extract and apply relevant information.
- Lack of Commitment: This often happens if people don’t see the relevance of management reporting.
Clearly the success of management reporting is not guaranteed by picking the best cloud based real-time system. Introducing management reporting is a major organisational change which should address technical as well as human issues.
Areas Covered in Management Reporting
Good management reporting covers a number of general areas:
- Financial Planning
- Risk Management
- People Performance, Rewards and Recognition
- Project management
- Performance Reporting, Dashboards and Scorecards
- Business Intelligence and full analytical integration
Reports can be broken down for:
- Organisational unit such as division or department)
- Geographic Region
- Client Segment
- Individual Client
In selecting what is to be covered, and how to do this via management reporting the input of Strategic Accounting Solutions can prove invaluable due to their expertise and skills,
Benefits of Good Management Reporting
Once a good management reporting system is in place decision makers will wonder how they ever coped without it. Benefits include:
More accurate planning and forecasting
Complete and accurate financial data are critical to financial forecasting and cash flow management. Short term forecasting is heavily reliant on timely reporting.
Speed to market
Effective cloud based management reporting has facilitated a dramatic increase in speed to market. The result is a much improved return on investment (ROI).
People who need management information to perform their tasks have much easier access to it. Cloud based systems can provide real time access to data.
Less hardware and improved utilisation from cloud based management reporting can deliver the same services at a much reduced cost.
Improved strategic decisions
Finance leaders can provide insights beyond traditional cost and performance numbers.
Management reporting that that reflects activity based costing and has access to non-financial data can improve productivity considerably.
Vertical and lateral communication improves through management reporting because it can provide access to information with cross-departmental impact.
Management reporting has evolved greatly in the last decade. Since the introduction of cloud based service management reporting has had the potential of delivering more benefits than ever before. In using the help of an organisation such as Strategic Accounting Solutions one can create and deliver the greatest benefit from management reporting.
- 1. Horváth & Partners (2013) Study: Management reports often provide insufficient support for decision-makers http://www.horvath-partners.com/en/press/current/press-announcement-detail/date////study-management-reports-often-provide-insufficient-support-for-decision-makers/?cHash=9994b765bf7f2c5d33caa2455fc38451
- Advanced Performance Institute (API) (accessed 2014-02-10). What is Performance Management? http://www.ap-institute.com/Performance%20Management.html