Managerial accounting reports are tools for understanding the numbers behind what is going on in your business. In addition to the standard traditional accounting reports that you must complete for tax purposes, managerial reporting includes any collection of data that can give useful information about operations. While standard financial reports must be formatted to generally accepted accounting principles, managerial accounting reports can be organized in any way that makes sense for your business.
Although financial reports are sometimes considered to be a different animal from managerial accounting, traditional financial reports also provide useful information to help you to understand company operations. Your profit and loss statement shows how much your company has spent and earned overall, breaking these numbers into categories and summarizing how much profit you've earned. Your balance sheet summarizes how much your company earns and how much it owes. This information is useful for managerial accounting because it shows how your profits and losses have fluctuated over time, and how much of your company's net worth takes the form of liquid cash that's available for operations.
Pro Forma Cash Flow
Your pro forma cash flow shows how much money you expect to come in during short-and-medium-term accounting periods, and how much you anticipate spending. This managerial accounting report gives a month-by-month summary of incoming and outgoing cash, showing when to anticipate shortfalls and surpluses. A short-term pro forma cash flow report is more useful than a longer-term version because, the farther out the predictions, the less accurate they are. Unforeseen circumstances such as obstacles and opportunities arise, and situations play out in ways you can't possibly foresee. Update your cash flow pro forma regularly to keep it relevant and useful.
Sales reports are useful for management accounting because they show the sources of your company's revenue, highlighting which avenues are most and least successful. Your sales reports highlight which of your business activities earn the most income, such as wholesale versus retail sales, or sales at particular accounts or venues. They can also show which of your salespeople are generating the most and the least income, giving you the basis for adjusting staffing or awarding bonuses.
Item Cost Reports
Your overall sales in each category only tell half the story: to truly understand where your business is most profitable, you must also have managerial accounting reports that show how much you've spent in each category. Item cost reports break down labor, materials and other expenses such as fees and licenses based on how these expenditures contribute to different types of earnings. By subtracting the expenses per category from the sales per category, you can see your net profit per category. This information is useful for determining which aspects of your business merit added investment, building on their potential for increased profitability.
Devra Gartenstein founded her first food business in 1987. In 2013 she transformed her most recent venture, a farmers market concession and catering company, into a worker-owned cooperative. She does one-on-one mentoring and consulting focused on entrepreneurship and practical business skills.