To increase the performance and profitability of business, different kinds of management reports are available. Companies only care about financial reports. You shouldn't give the whole work of handling the financial and management reports to just one person. Reporting is not just about calculating numbers, thus before hiring a specialist, it is important to understand the difference between these two.
Financial reporting is the process of influencing business goals by providing financial information to company stakeholders. The three main aspects like the cash flow, profitability and value of assets come under financial reporting and it is mainly used for external purposes. The reports covered by financial reporting are:-
- Profit and Loss Statements
- Balance Sheets
- Accounts Payable
- Accounts Receivable
- Statement of transactions
Procedures of Statutory Audit
For the approval of loans, lines of credit and GAAP (Generally accepted accounting principles) these report is used. The financial position of your business can be understood through these reports. The performance of your company can be measured through this. But it can’t be analysed on how the company will perform in the next quarter.
A company's performance is based on the management reporting. The management reports lead you to the financial standing of the company. Through proper bookkeeping, the management reports are sent to the CEO by management accountants. These reports are for internal use and are not mandatory. It is concentrated on the segments of business, not an overall evaluation. It is also useful in focusing on specific areas of business. You should also make apt reports for your company, easy to make strategic decisions.
What is the difference between Financial and Management Reporting?
Even though both Financial and Management Reporting have different kinds of strategies, companies often lookout for someone who can deal with both. But this is not advisable as both are different types of reporting. Daily the accountants handle the financial and management reports.
Without receiving the management reports you will be missing the information that helps your company to grow or can prevent you from organising programs that don't provide ROI. In order to prevent cash flow problems and add more numbers the financial report is very essential. To make better decisions in business you also require management reports at the same time.
Ensuring the right procedures and systems is important for implementing correct financial and management reports. We are one of the best consulting firms that provide accurate and up to date financial reports.