084 569 2428 gareth@cloudworxsa.com

Strategy is an essential part of running a business. And the best way to build a strategy is on a foundation of business data. This is where management reporting comes in. But what exactly is a management report, what should be included and what are the benefits of producing them on a monthly basis? Read on for a full breakdown on how to start creating yours. Trust us, you won’t look back.

What is a Management Report?
Think about your business, think about your monthly operations, sales, spending, budgeting, goals, KPIs and every other trackable internal task that makes up your business. A monthly management report is a collection and understandable presentation of the trackable data from across departments that aims to allow managers to make better-informed decisions.  Management reports are of absolute importance for developing a business strategy and every successful business leader should have access to such an overview of their business’ data.

Financial Reports vs. Management Reports
Although management reports do often contain financial elements, financial and management reports are not one and the same.

Financial Reports
Financial reports are compiled for external users and focus on creating financial statements that are shareable outside of the company. The ultimate goal of a financial report is to create and present an accurate financial statement that is reflective of a certain time period. More often than not, financial reports are created on a quarterly or annual basis, as opposed to management reports which are done monthly.

Financial reports contain things like:

● Income statements
● Profit and loss statements
● Payable accounts
● Accounts receivable
● Statement of cash flows
● Balance sheets

Financial reports allow for a look backwards and don’t provide much in the way of predictions or business performance in the months or year ahead. And this is the primary difference between financial and management reports.

Management Reports
Management reports are compiled for internal purposes and communicate the results of business processes over the course of a month. The main purpose of a management report is to present a collection of data from across departments to management, allowing them to make better-informed decisions for the coming month.

The common elements found in and types of management reports are
● Sales reports
● Inventory reports
● Departmental reports
● Predictive reports
● Regulatory and statutory reports

Benefits of Creating a Monthly Management Report
A report of any kind is essential for businesses because it can provide key insights into the inner workings of a business and perspective on the way forward in terms of strategy. The sense of direction found in management reports is the biggest benefit of creating them, but it isn’t the only benefit. Additional benefits include:

Management reports improve communication
Management reports are used by all levels of management, which means that the access to information is the same across the business. As a result, communication becomes clearer. This helps to identify problems before they arise and to come to mutually agreeable solutions before these problems escalate.

Management reports help to improve efficiency within the organisation
Having a solid guideline from which to work not only saves your management team time when building your strategy, but it’ll provide direction that can extend into other areas of your business and result in an increase in efficiency and productivity overall.

Management reports can help to improve budgeting & the overall cost-effectiveness of a business
The cost efficiency associated with producing management reports is enough of a benefit to make any business owner realise their importance. Having direct access to your company’s data means being better equipped to switch gears and respond to any changes within the business. Management reports provide the data to substantiate making difficult business decisions, especially those regarding the budget.

What to Include When Creating a Management Report
1. Start with the End in Mind
Most business owners find themselves getting overwhelmed or over-enthusiastic when sitting down to write a monthly management report. But when you approach the task with intention and an understanding of what you want the result to be, it becomes easier.  We recommend focusing on the end result and working your way forward from there. Ask yourself the following questions and build out your structure based on your answers.
● How do you define success?
● What do you need to attract new business?
● What are the key drivers of your business?
● Do you know when to hire new employees?
● Do you know when to terminate contracts with employees?

2. Set Goals & Communication Objectives
Setting goals and determining communication objectives in the best way to approach formulating any business-centred document. When deciding on these objectives, consider taking yourself through the following questions:
● Who is the target of this piece of communication?
● How often do you need to produce such a report? (On a monthly basis is what we
● Does the target of this report know what to do with it?
● What decisions do you want this report to influence?
Answering the above listed questions will lead you down the right path in determining what your objectives are.

3. Summary of Month’s Outcomes
In your month’s summary, you should detail every activity over the past month that impacted, both positively and negatively, the way your business functioned. This includes things like:
● KPIs and how they were met
● Customer interaction and feedback
● Real-time insights
● Steps for improvement

4. Detail Financial Elements
Business owners often mistake management reports for financial reports, and this sometimes leads to management reports being completely void of financial elements. There is, however, a balance that can be achieved and your monthly financial data does have a place in your management reports.
The financial elements you should include are things like:
● Cash management
● Profit & loss indicators
● Your bigger financial picture

5. Analyse the Month & Outline Approach for the Following Month
Once you’ve filled in all your data, and dotted your i’s and crossed your t’s, take a step back to analyse the full picture and understand the way forward should be. This is the most important step because without it your report is just a collection of data. If you’re stuck with this one, consider the role your objectives have to play and how you can use your data to make
decisions.  It’s also helpful to look at your business’ vision and mission if you’re feeling really stuck with this.  All-in-all, management reports are there to provide a point of departure for tackling your business’ future, and they serve as a means for reviewing where you’ve come from.

Want to learn more about how to create management reports for your business/ Book a call with
a Cloudworx Accountant today, and we’ll take you through the process.

Cloudworx, Accounting for your Peace of Mind.