If you’re considering expanding your accounting business, it may be time to look into offering managerial accounting services to give you a leg up on your competitors. Managerial accounting, sometimes called cost accounting, is a branch of accounting focused on measuring and analyzing company data to help the management of that company make better decisions. But how does managerial accounting differ from financial accounting? When your firm offers managerial accounting services, you’re working to provide information to people inside of a company. If you’re offering financial accounting, your focus is providing information to people and entities outside of a company.
Common Managerial Accounting Services
Managerial accounting utilizes information to focus on pricing and cost analysis of a company’s operations. You also spend time dealing with the creation and analysis of company budgets and performance reports. Other tasks that managerial accountants perform include:
- Calculating your gross margin,
- Cash flow planning
- Production line and sales process analysis
- Capital expenditure analysis
- Trend analysis and forecasting
- Product valuation
By conducting a detailed analysis of a company’s operations, you’re able to confidently explain the company’s operating performance over specific periods of time. You may also be able to provide useful information that helps the business expand and become more profitable.
Benefits of Managerial Accounting
Accounting information is generally used to help with decision making. By offering managerial accounting services, you can help managers reach their internal organizational goals. In general, there are five major uses of managerial accounting for companies.
Managerial accounting helps a company prepare for the future, as you can create a report that’s much more detailed than most financial reports. Your reports are likely to include information dealing with market reach, regional information, and specific products or services. A manager is able to use this information to set new objectives and create a detailed plan to achieve these goals.
Your managerial accounting services give a manager a greater sense of control over their company’s success. The information inside your reports are often only shared within the company, so they typically don’t have to adhere to generally accepted accounting principles (GAAP). This gives a manager the power to decide which parts of the company require further investigation, making them better able to prioritize limited resources. The qualitative and quantitative feedback in your report offers an orderly road map so they can confidently make decisions.
Budgetary Decision Making
Budget analysis is a major part of a managerial accounting report. In contrast, financial accounting doesn’t deal with budgets, as it deals more with historical data. By providing budget information, you give a manager the power to make informed long-term decisions, share useful information within the company, and create detailed plans.
Unlike financial accounting, which focuses on past information, managerial accounting deals with actual performance and contrasts it with a company’s current goals and future expectations. Businesses use this information to spot problems that could arise and create potential solutions. This helps a company prepare for the future and avoid preventable issues.
Managerial accounting is useful for setting goals because it delivers transparent data. A manager can take the information you provide and use it to track the company’s performance, establish goals, and make adjustments that benefit and inspire employees to increase profitability and productivity.
Why You Should Offer Managerial Accounting Services
Many accounting firms only offer financial accounting services. However, by also offering managerial accounting services, your accounting firm can add more value to existing and new business client relationships. This can help your firm stand out among the competition, especially from those firms that only offer one type of service or the other.
Offering managerial accounting services also adds value to your firm. It can improve your revenues, increase your firm’s efficiency, and improve your clients’ decision-making process. It’s something that you should seriously consider, especially if you want your company to grow. The short-term investment needed to create a managerial accounting division and staff is likely outweighed by future financial benefits to your firm over the long run.
Staying organized and working efficiently becomes more important than ever as your business develops. You can take advantage of cloud-based accounting solutions to keep up with growing demand and continue providing exceptional value to your clients. Collaborate with clients, stay on track, and grow your firm with QuickBooks Online Accountant. Sign up for free.