The level of complexity of the business world is increasing along with the increasing number of consumers, increasing the number of transactions, and expanding business areas. In the highly competitive business world, we need a way to improve work performance in each field, including accounting.
Accounting professionals are responsible for so many things, one of which is helping with management reports and financial reporting. In making this report, professionals can take advantage of the rapid development of technology.
Technology can be used to shorten response time for business intelligence and analytics. With a shorter response time, the process of making financial reports and management will be faster and more effective.
Difference Between Financial Reporting and Management Reports
Before discussing the role of technology in the accounting system, you should first understand the difference between financial reporting and management reports.
Most business owners are certainly very familiar with the basic financial statements that are received every month, but they still lack understanding of management reports and the benefits that can be obtained from this one type of report.
Understanding Financial Statements
Financial statements are a collection of data from all types of transactions both income and expenditure in a certain period. Each company has a period of making financial statements each, starting from weekly, monthly, 3 months, up to once a year.
In general, data contained in financial statements include:
- Record of expenditure transactions.
- Entry transaction records.
- Statement of cash flow.
- Balance sheet.
- Total profits or gains and losses.
Basically, the purpose of financial statements in this form is a report that shows the financial condition of a company at a time. This report becomes a general description of a company's performance. Every company must make this report both for internal needs and for external needs such as when they apply for loans.
For those of you who are just starting a business, it is very important to know how to make simple financial accounting as part of financial management. As the business grows, you can also develop the form of your financial statements.
Understanding Management Reports
Financial statements are only able to provide a general description of the company's financial condition, but are unable to provide an in-depth understanding of the company's specific conditions.
On the other hand, management reports are able to provide more detailed information in the form of:
- Profit and loss data from each department, team or work group, as well as the type of project.
- Achievement rate data.
- Usage data (utilization rate).
Reports like this will be very useful for leaders who want to know in detail the conditions and performance of one of their departments within a certain period of time. If the company has a loss, it will be much easier to track and find the source of the loss with the management report.
Benefits of Financial Statements and Management Reports
What are the benefits of financial statements and management reports?
In general, there are 2 benefits that can be obtained from these two reports:
- The financial statements will provide information about the general financial condition, whether the cash flow runs smoothly or not, whether the amount of profit that goes in accordance with existing data, and so on.
- More specific management reports can be used to conduct more in-depth analysis. If management reports indicate a problem with one of the teams, departments, or projects, then the leadership can immediately make a policy to resolve the problem as soon as possible.
Basically, management reports are solid evidence that can be used in business decision making.
Providers of financial consulting services such as Logiframe will help all those who need help in making financial reporting and management reports by using the latest technology systems to get all these benefits.
The Role of Technology in Changing Accounting Systems
The accounting system used in financial reporting and the preparation of management reports has changed very dramatically thanks to technology.
In general, there are at least 3 technological developments that change the accounting system on a global scale, namely:
Software in Accounting and Finance
At present, various aspects of work in the field of accounting can be completed using software. In the past 1 decade, software development looks very rapid. Some software such as Xero accounting software was asked as the best software for a business. Software has grown into a tool to help improve work efficiency and minimize human error.
In addition, various software in the field of accounting is also designed to be able to detect the existence of anomalous data to be explored further. With an early warning system like this, its users can avoid the occurrence of greater problems in the future.
Of course the software used is software that is really high quality and in accordance with company conditions. The owners of the company should know how to choose the right accounting software for their business so as not to suffer losses in the future.
The rapid development of Cloud computing is one aspect of technological development that also plays an important role in changing the accounting system.
Cloud computing makes it easy for users to store data online and can be easily accessed by interested parties. This allows clients to send financial data to financial and accounting consultants.
In addition, security factors make cloud computing increasingly popular. The current cloud computing security system has become more sophisticated so that only data owners can access their data. In this way, the financial data of each company will be safeguarded from irresponsible parties.
The higher level of mobility makes the demands for being able to work anytime and anywhere become higher. The development of smartphones with a variety of modern features and increasingly fast internet networks make long distance communication easier.
This also affects the world of accounting. Business owners, especially small businesses, prefer to keep records of all transactions wherever they are. With a mobile device, things like this can be easily done. In addition, they can also easily check financial and account data at any time.
Communication between clients and financial consultants has also become easier and safer. Both parties can easily discuss the latest financial statements without any distance restrictions.
Automation in Finance and Accounting
The role of technology in finance and accounting can no longer be doubted. The existence of cloud computing, mobile devices, and various types of software has simplified the process of recording and making reports.
In addition, technological developments also make various types of tasks can be done automatically. This automation system has been adopted by various parties. The existence of this system will increase work effectiveness and reduce the cost burden.
The following are some examples of tasks or jobs that can be done by an automation system:
- Audit. Digitizing the audit process will further enhance data security with a digital trail that provides information about who and when the data is accessed. This will improve the efficiency and accuracy of audit results.
- Invoice processing. The current digital financial accounting system has developed a digital workflow that allows the existing system to recognize the accounting code for the invoice making process.
- The process of closing books periodically. Technology and automation systems can help in the process of closing books periodically. An automation system that uses artificial intelligence can collect data from a variety of available sources, combine that data, and present it in a report in a short amount of time. In this way, interested parties can immediately take policy based on existing data.
Besides these three examples, there are still various automation systems in the world of accounting and finance that have begun to be implemented by many companies. The use of the automation system will certainly shorten work time, increase efficiency, and in the long run can help improve work productivity.
In the business world, the use of digital financial accounting systems has become increasingly widespread. Business owners and companies should immediately adapt and embrace the development of this technology in order to remain able to compete in a competitive business world. This can be done by upgrading the financial system in each company with the latest technology, or to make it easier, using the services of financial consultants who are ready to assist in the process of transforming digital financial accounting systems such as Logiframe.
Accounting Financial System Transformation Services
The process of financial reporting and making management reports is now somewhat more complex and more complicated. Why?
This is caused by various things ranging from business transactions that are becoming more and more complex and the emergence of various regulations that require an increase in financial reporting standards.
On the other hand, demands from the company and shareholders for periodic reports that are accurate and efficient also add to the burden of accountants. Rapid technological development will basically make the work of accountants become easier, but it is not easy to keep abreast of developments in existing technology.
The accounting and financial department in a company will certainly try to meet all the demands that exist, but various obstacles confront for example:
- Outdated processes and equipment.
- Lack of transparency.
- The data source used is not consistent.
- Delays in data transmission.
- Various interventions that cause confusion and errors in making reports.
These various obstacles disrupted the financial reporting process and management reports. Not surprisingly, many companies have turned to using financial consulting services such as Logiframe to help overcome these obstacles.
Professional financial consultants such as Logiframe can provide guidance for entrepreneurs to achieve profits with better financial management. Specifically in terms of making financial and management reports, the Logiframe uses the latest software that has been equipped with various features to facilitate the work process.
The main key to the successful use of financial consulting services such as Logiframe is the combination of knowledge and expertise possessed by the consultants, as well as the software used. The software used will make the processing of large amounts of data easier and faster, and is able to recognize certain patterns that are needed. On the other hand, the consultants have the knowledge to run existing software and technology. The use of software also gives consultants more time to think of other more effective financial strategies to help the company.