Management Reporting: The key to informed decision making and success
Management reporting is a process that involves collecting, analyzing, and presenting information to help managers make informed decisions about their business. It is typically focused on operational data, rather than financial data, and is used to track the performance of various aspects of the business, such as sales, marketing, customer service, and production.
Management vs Financial Reporting
There is a distinction between management reporting and financial reporting. Financial reporting is primarily concerned with the financial health of a business and involves the preparation of financial statements such as balance sheets, income statements, and cash flow statements. Management reporting, on the other hand, is focused on providing information about the day-to-day operations of the business, and is often used to identify trends and patterns that can help managers make better decisions.
| Management Reporting | Financial Reporting |
|---|---|
| Intended for internal use by management | Intended for external use by shareholders, investors, and regulators |
| Focuses on operational performance and progress towards goals | Focuses on financial performance and compliance with accounting standards |
| Includes operational metrics (e.g. delivery time, customer loyalty, etc.) | Includes financial metrics such as revenue and net income |
| Frequently produced on a regular basis (e.g. weekly or monthly) | Produced on a quarterly or annual basis |
| May include forecasted or budgeted data | Must include actual data |
| May be less formal and follow a company's specific format | Must follow generally accepted accounting principles (GAAP) or International Financial Reporting Standards (IFRS) |
Risks of Operating Without Management Reports
Without management reports, it can be difficult for managers to make informed decisions about their business. These reports provide a wealth of information about the performance of various aspects of the business, and allow managers to see how their decisions are impacting the overall health of the organization. Without this information, it can be difficult for managers to identify problems or opportunities, and they may struggle to effectively allocate resources or make strategic decisions.
There are also risks associated with making decisions without management reports. For example, if a manager lacks visibility into the performance of a particular area of the business, they may make decisions that are not aligned with the overall goals of the organization. This can lead to inefficiencies and missed opportunities, and can ultimately harm the long-term success of the business. Even if a specific problem or opportunity has been identified, without Management Reporting, the proposed solution cannot be justified.
The business environment has become more adversarial than ever and the demands for constant adaptation are constantly increasing. The risks associated with the lack of Management Reports are significant and are mainly related to the lack of knowledge about the points that need improvement. For example, if a manager does not have visibility into the performance of a specific area of his supervision, he may either make decisions that are not aligned with the overall goals of the company or take no action when it is needed. Overall, this makes a business inefficient, harming its long-term success.
The importance or Management Reporting automation for SMEs
The manual preparation of Management Reports by an executives can be a tedious and time-consuming task, limited also by existing tools and knowledge, particularly when complex calculations are involved. This can make it difficult for decision-makers to access the information they need in a timely manner. However, modern technologies such as business intelligence tools have revolutionized the process by automating the reporting process and making it available to those who need it in real time. This eliminates the need for manual analysis and makes it easier for decision-makers to access the information they need to make informed decisions.
For small and medium-sized enterprises (SMEs), the automation of Management Reporting is even more imperative. SMEs usually have limited resources and may struggle to keep up with the demands of manual reporting. By automating this process, SMEs can free up time and resources that can be spent more effectively in other areas of the business. Current technological capabilities, offer SMEs the opportunity to compete with larger enterprises in automated management reporting, at a cost that was too good to be true a few years ago.
Contact us today to help you identify and build your automated Management Reporting system, using modern data analysis tools.
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| This article intends to inform the reader and in no way substitutes the specialized consulting services. For more information, please contact MDC Stiakakis SA (Monis Kardiotisis 49, Heraklion | +30 2810 280985) |