Why Your Business Should Have Managerial Accounting Along with Financial Accounting
Did you know there is more than one kind of accounting that you can get for your business? You might be thinking “isn’t all accounting simply to keep track of financial records, taxes, and manage payroll, insurance and other employee benefits?” Generally speaking, yes but many companies today want to know more about their finances than just those numbers. That’s why many accounting firms today offer both financial accounting and managerial accounting. As explained here at https://blog.keepingyourbalance.com/the-difference-between-financial-and-managerial-accounting, you can know things about your projected finances with added managerial accounting that you may not get from only financial accounting.
When Managerial Accounting Is Most Helpful
Managerial accounting is a lot narrower in scope than regular financial accounting, and the main idea of this accounting is to make sure funds allocated to your business either as a whole or for department spending are being spent wisely. As Investopedia states in this article, managerial accounting is all about managers having an idea of what the future revenue and cash flow for the company will look like, and therefore what they should be doing in their current planning. Since managerial accounting deals less with hard numbers and more with estimates, it’s unlikely to have any use in getting your business approved for a bank loan or winning over a venture capital investor. However, if its estimates are using fairly reliable data from your financial accounting, you can start forming ideas on what your expectations on services you subscribe to should be as well as ROI in other assets. Plus, if asked by an investor on where you see the direction of the company going financially, managerial accounting can help you answer that question.
Cloud Accounting And Budget Planning
One way you can always stay ahead of the curve by having both regular financial accounting reports and managerial accounting tools at your disposal is to take it to the cloud. This article explains how cloud accounting or SAAS accounting services can give you access to up-to-date financial information and keep you in communication with other departments and other management when it comes to accounting either in financial or managerial. It especially can be useful when facing an audit either from an external auditor or having your human resource department conduct its own audits. Generally, cloud accounting combines tools both for past financial statement reports and analysis as well as future budgeting.
In conclusion, while managerial accounting may not be as much of a necessity as regular financial accounting, it’s useful for making better informed decisions for your business and weighing in different risks. And you can make the most out of your accounting services by using a cloud SAAS platform since nearly every cloud platform has budgeting software included in it, and with today’s simplified cloud accounting you do not need to know how to use complex spreadsheet software. Consider not only how much you’ll save on cloud accounting over hiring traditional accountants, but also how much you’ll save on legacy software systems while also having your financial data backed up.