There are several factors vital to businesses’ growth every manager should know about and must have control over. As good management keeps the business running, financial accounting determines how well a business is doing and how it must carry on with its operations. However, managerial accounting and financial accounting are two different concepts and business managers need to carefully expedite them, or otherwise outsource them with reliable accounting service providers in the Philippines. As a business manager, you need to remember that your business isn’t just all about money itself and if you are having a hard time understanding how accounting works and how managerial and financial accounting separately function, outsourcing accounting services in the Philippines can always be a solution. Success in business is not about how big the amount of money you invest as a startup—it is about how well you manage your investment together with the other factors that may affect your business. That money management is called accounting.
As a paddle is used to direct a boat, accounting is going to be your guide to business decisions. It will help you to keep moving forward, avoiding or remedying money problems, and ultimately bankruptcy. So how does managerial and financial accounting work together for better business?
Investopedia defines managerial accounting as a helpful tool used to measure the results of manager’s decisions. It is done internally and commonly extracts relevant information from financial accounting to make decisions about budgeting and goal setting. As the amounts of in-going and out-going money tell more than just about the figures, managerial accounting helps managers to balance out profits and losses of a business. For instance, to determine the price of your product or service, you need to first define cost to include labor, raw materials, factory rent(if applicable), and any other explicit or marginal expenses. This is called product costing, one of the useful techniques in managerial accounting, which in return would help you set product prices competitively.
On the other hand, financial accounting is responsible for gathering and summarizing financial data, such as balance sheet, cash flow statements and income statements. Unlike managerial accounting where there is no specified format to follow, financial accounting needs to be accurate and transparent. In addition, it can also be used as references by your clients, investors and suppliers. Every document used in financial accounting serves as the basis of information in making a decision not just of managerial direction, but company decisions especially since it positions the company not only on its own financial standing but also to all other pertinent parties and stakeholders involved.
As you could always outsource accounting services in the Philippines, it is still important to understand how it works with your business. Managerial accounting works well with financial accounting; both of them will keep you in the right direction to bringing your business to success. So keep a good communication with your accountant and as well as to your production team. Outsourcing accounting service doesn’t mean you don’t need to do anything and just wait for the monthly reports, it means you’ll be working with people who are reliable and knowledgeable enough to help you reach your goals. Remember, money is not everything in business; however, how well you handle it could spell your next reason for a celebration.
