What Are The Pros And Cons Of Management Reporting?

If managers are at the core of a business' success, then having access to the right information is at the core of a manager's success within an organization. This is what has made management reporting one of the most important factors in organizations whether they're for-profits, non-profits or government agencies.

Management reporting is the process by which information on various aspects of an organization is delivered to the members of the management team. Although financial data is at the core of management reporting, the data is more detailed than what is found in annual reports. These reports also contain other nonfinancial variables. What are the advantages and disadvantages of all this?

Advantages of Management Reporting

Management reporting can benefit an organization because:

• It provides managers with the information they need to gauge the overall health of an organization

• Managers are able to identify performing and non-performing areas by tracking data

• Management teams can have access to up-to-date information, enabling them to make decisions that are more relevant

• The information provided can help to identify non-performing managers or heads of different departments.

• The heads of the organization will have access to data that will enable them to track the performance of everyone, including employees at the lowest level.

Disadvantages of Management Reporting

As useful as management reporting is, it also has its downsides. These include:

• The amount of information available can be overwhelming especially in large organizations with different departments

• Companies need to have the resources to hold and process all the data that they receive from different areas. Some resort to data warehousing to solve this

• Identifying data that will be relevant for certain applications can be difficult

• The business must provide individuals throughout the system with a means of entering data into the system

How to Improve Management Reporting

Because there's a lot of data associated with management reporting, some of the ways that it can be improved include:

• Having the right key performance indicators. This ensures that the system only collects useful data

• Having a clear line of accountability. When you know who is in charge of what, you'll know what to expect from them and they'll also know the same.

• Work with good software that is able to be integrated throughout the system. QuickBooks Online, for example, makes it easier to gather and analyze data from different branches of your business.

• Properly communicate what is expected from different individuals or departments

Consulting a certified public accountant to help you set up management reporting to make sure you're tracking the right information and collecting it correctly can be key to making the most of your information.