How Can a Management Accountant Add Value to Your Business
A management accountant acts as the right-hand person of business leaders when making informed, data-backed decisions, especially when high-stake activities are involved.
This article explores the role of management accountants in maintaining the financial stability of an organization, how they add value to its overall growth and why you need to work with one.
In this article:
- What does a management accountant do?
- The roles and responsibilities of a management accountant
- How do management accountants add value to your organization?
- When should you hire a management accountant?
- Is it a good idea to outsource management accounting services?
- Ready to work with a management accountant?
What does a management accountant do?
A management accountant’s primary role is to provide business leaders with insights into an organization’s performance.
They prepare and analyze financial data, transform them into useful information and create actionable reports to assist key decision-makers, particularly the CFO, in making critical strategic decisions.
The roles and responsibilities of a management accountant
The roles and responsibilities of a management accountant can vary from one organization to another. But in most cases, here’s a list of the common duties they perform:
- Financial analysis and interpretation. Management accountants are responsible for analyzing and extracting value from key financial information. They also interpret how it can affect the business.
- Reporting. Management accountants transform financial and technical insights into a digestible, easy-to-understand format. This way, non-financial managers can determine how certain information affects their department. Management accountants must also advise on the possible financial implications of specific business decisions.
- Financial planning and budgeting. Management accountant work side-by-side with CFOs and other business leaders in maintaining the financial stability of an organization. They also work on allocating budgets and overseeing how funds are being used.
- Forecasting: Since they do financial analysis and reporting, management accountants are also the best people to prepare both short- and long-term business forecasts.
- Cost optimization: Management accountants find the best option to reduce a company’s operational and production costs without compromising quality.
- Leadership: Management accountants can also help in supervising bookkeepers and junior-level accountants who handle basic accounting tasks.
- Risk management: Lastly, management accountants create, enforce and monitor compliance with financial systems and corporate governance procedures to minimize potential risks.
How do management accountants add value to your organization?
Working with a management accountant can bring you several benefits, as outlined below:
1. Improves revenue generation
By preparing reports on profit and loss, budget comparison and examining your processes and procedures, a management accountant can help increase the efficiency of your business operations.
Receiving regular detailed reports on various performance metrics, including monthly cash forecasts and budgeting, revenue projections, and variance analyses will be beneficial for key decision-makers in your organization.
Subsequently, you’ll have a better handle on your expenditure and pricing.
2. Enhances business efficiency
The responsibilities of a management accountant include the preparation of managerial reports that provide you with a clear picture of the several factors that drive business operations.
With these reports, you can the actual cost of your organization’s daily operations. It’ll also help you make sense of your business’s financial information.
As a result, you would be better equipped to allocate and budget resources and address bottlenecks in your processes.
3. Supports strategic decision-making
A skilled management accountant collects and analyzes the information that could mean the difference between the success and failure of your firm.
Using complex tools for analysis, your management accountant assesses constraints and helps you set targets, identify trends, and present you with relevant financial and non-financial information.
In this sense, managerial accounting drives better decision-making. With a management accountant on your team, you can leave the guesswork out when making operational and financial decisions for your firm.
When should you work with a management accountant?
It's time to work with a management accountant when:
- Your organization lacks strategic plans
- You have skyrocketing operational costs
- You need to make sense of your business data
- You struggle with setting prices
- There's poor forecasting in your organization
- You struggle in making informed business decisions
- You’re seeking better growth opportunities
- You need help in keeping your financial health in the green
Is it a good idea to outsource management accounting services?
Does working with an outsourced management accountant a good idea?
It depends on your current business needs and chosen outsourcing partner.
Outsourcing management accounting services can be a strategic move if you need to cut costs while maintaining service quality. It's also recommended if you're experiencing difficulties in hiring qualified management accountants within your geographical location.
Through outsourcing, you can widen your reach in terms of recruitment — reaching competent professionals from offshore locations like the Philippines.
The outsourcing company you’ll choose also matters if you’d like to succeed in this initiative.
Since management accountants mostly deal with internal business activities, you’d like to find a trustworthy accounting outsourcing company with a proven track record and good corporate culture. Your vision and core values must also align. Top it off with open communication, and outsourcing can be just the cost-effective solution you’re looking for to fill in the talent gaps in your organization.
In summary, outsourcing can be a good idea if it’s what your current business needs call for and you’re working with a good accounting outsourcing company.
Read Next: Is it Time to Outsource Your Accounting?
Ready to work with a management accountant?
It can be challenging to hire a management accountant who can understand your operational processes, develop an effective accounting system and maintain high-quality standards. If you lack the right resources now, outsourcing can be a better option.
If you’re currently looking for an outsourcing partner, consider D&V Philippines. Contact us today to learn more about our outsourced management accounting services and how our team of experts can add value to your organization.
You can also download our whitepaper, D&V Philippines: Your Talent Sourcing Partner, to find out how we source and develop the right talents who can be a good fit for your company.
This article was first published on 28 March 2017 and was edited on 23 June 2023 for relevancy and comprehensiveness. Edited by:Mary MIlorrie Campos