What is a management accountant?
I am often struck by the lack of understanding regarding what a management accountant is and what management accountancy even means.
I have met experienced Chartered Accountants, and they are supposed to be the brainy bunch, who have no idea and regard it as somehow niche or specialist. In this blog I aim to pull back the veil of this "dark art" and explain how management accountants add value to any business.
In medium to large organisations, you generally have two main distinctions between accountants; financial accountants and management accountants.
Financial accountants focus on balance sheets, cash, creditors, capital, debtors etc. and mainly serve clients external to the organisation. Management accountants on the other hand report to internal management, directly to the board of directors. Their focus is the profit and loss statement and profitability, growth, efficiency and the like.
When Chartered Management Accountants move into general practice as I have and help small business clients we find that many accountants try to differentiate on their systems expertise and their tax knowledge, but guess what? Clients take that for granted these days, everyone knows an accountant should save you money on tax and seamlessly administer your accounts.
What clients need is information to aid their decision-making. Well management accountants have experience of doing this in large organisations at board level and these skills transfer. I have seen Chartered Accountants try to move into this territory, merely emailing financial statements, maybe working out a gross profit margin; this is management accountancy 101.
True value is found in analysing and interpreting the figures. Drilling down into the data, the sector, forecasting and planning; looking forward not backward.
I met an experienced and successful MD this morning networking. He was proud to have forecast his cash for the next 12 months. On the tip of my tongue was the question "What about the following 2-4 years?". If you don't have a long-term strategy you have no direction. If you have no direction you have no focus and nothing to measure.
Enter the management accountant!