The Importance of Management Reports and How They Benefit Your Company
In order to successfully improve you business growth strategy, it is important to have management reports. This is the one tool that is instrumental for any type of business and is normally generated every month.
So what is a Management Report?
When it comes to a management report, the key areas that you focus on are the profits and losses amongst your clients, products, geographic regions, and even the company’s departments. The first step would be to have a computerized system develop the necessary data, which is collected by a mid-level manager and written up using the following reports:
- Cash Flow – this report provides the monthly transactions for your bank, which includes your company’s expenses and liabilities, along with the income you have received. For example, by analyzing your cash flow, you may realize that you had a $30,000 increase in accounts receivable. The increase could be that your client was invoiced for $50,000, but you only received $20,000. The amount in accounts receivable is the difference. This is only one of many examples of how there could be a difference between the cash in your bank and the profit in your reports, which is easily explained with this amazing clash flow tool.
- Balance Sheet is a summary of the company’s assets, retained earnings, and liabilities are shown on this report. This report delivers an accurate evaluation of your company’s worth (e.g. vehicles, equipment, and cash on hand) minus what has to be paid (e.g. suppliers, future bills). Using a balance sheet, you can easily discover which clients are behind on their payments and how much money is owed to you. And you also have the option of comparing the sales from a previous month to the current month. This tool goes as far as averaging the revenue per customer and the amount of sales that each salesperson generated.
- Profit and Loss is income from sales, minus expenses that are generated on a daily basis. The report will divide your expenses into their necessary spending categories. Maybe you want to average out your numbers for the year. You can do this by viewing your sales and expenses on a quarter-to-quarter or month-to-month basis. Now, you will know which months or quarters are the strongest for your company and which ones you have to work on. You can even view the numbers by a specific team, department, or assignment.
- Sales – one of the most important reports is the sales report, because it generates information about the invoices that were raised for the past month.
- Trade Creditor is a list of all the businesses that you have to pay.
- Trade Debtor is a record of all the clients that have invoices with your business and still owe you money.
The Importance of Management Reports
1. You can discover trends and make the best decisions
Whenever you perform a financial report, you know exactly if the company is gaining or losing. The only downside is that you don’t know exactly how and why this may be happening. There is no benefit in simply knowing that you are winning or losing. With a management report, you are able to go within the workings of your company to see what is actually causing your company to win or lose. Even better, you can find out what areas need work and which parts of the company are the strongest. This is necessary, because you could have a profit for the year and still have a weak link within the company. This issue could be preventing you from making even more money for the company. Are you in business to leave money on the table?
2. Prevent any unnecessary losses and expenses
And with the world of business constantly changing, it is critical to know when and where you may need to make some adjustments within the company. You definitely don’t want to be the company that reacts, after it is too late. By then, your business is in the hole and you have a lot more to lose.
3. A powerful tool that delivers up-to-date information about your company
With a management report, you always have the upper hand and can easily adjust to the new changes in business. This is a strategic tool that can be used for long-term plans of growth and profits. Investing in an informative management report is a no-brainer for any organization. Invest in your future today and make sure you have the best Corporate Service Provider to cover your back from registration of your business in the UAE to monthly management reports and annual reporting.
If you believe that your company has the potential to grow and generate more success, then now is the time to make it a reality. At My Business Consulting DMCC, our extraordinary team of experts are always available and ready to assist you. Give us a call today at +971 55 147 9576 or send us an email: [email protected], and allow us to use our multiple award-winning services to turn your losses into profits!