At this time of year, all business owners are thinking about taxes. They are finalizing their accounting for 2011 and reaching out to their tax preparers. Their tax preparers will take their financial statements, make some adjusting entries, and start plugging the information into tax software. Business owners hope that all of their expenses are fully deductible and that some additional spending during the year works to their advantage to lower their profit and thus “pay less taxes”.
The tax return gets filed. Now what? Are they really striving for lower profits as they manage the business? Do they really want to increase spending without an increase in revenue? A business cannot be managed on tax or “compliance” reporting alone.
So what is Management Reporting? Management Reporting is designed around the specific needs of a business. It helps a business owner look at business activities and financial results in a format that is easy to access, easy to understand, and provides valuable insight.
Financial Statements are a starting point, but financial statements alone do not help identify what is driving the financial results. If sales are decreasing, a business owner needs to understand what division, product, or customer segment is driving the decline. If inventory turnover has slowed, a business owner needs to look at product specific sales and product specific inventory information. Most accounting programs provide high level financial statements and many variations of detailed reports. It becomes a tedious effort to analyze the detailed reports in order to understand the overall financial results.
Unfortunately, most accounting software packages do not provide the ability to organize and compile information in a way that is useful to a business owner. Fortunately, there are various tools that can link right into your data and report the information in a format that has meaning and provides value in understanding the results and making decisions. Reporting can be customized to a business owner’s specific needs and preferences.
We can help business owners define and implement the reporting they should be using to manage their business. We can also help business owners get to the reporting they already know they need, but can’t seem to access. Either way, the investment required to implement these types of solutions is small and the benefits can be significant.