Accounting & Management Accounting: 6 Key Differences

Accounting is the main source of data for reporting to the tax authorities. Management Accounting is based on accounting, however, it is usually topped up with additional info.
Bottom line — Management Accounting is created for the inner goals of the company. They help with managerial decisions: for example, to analyze and minimize the risks.

Accounting implies using a strict form of the report. Management Accounting allows more freedom: any form can be used based on the needs of the business. It can be manual or automated, cloud or box version, done by the staff or the outsourcers.
One more option is FinPlan — the service can do everything related to Management Accounting for you, starting with forming the reports and business analysis to indicating weak spots and helping avoid possible risks.

One more point to notice is the accessibility of up-to-date numbers. Accounting is fully formed at least once a quarter. As for the Management Accounting data, it can be updated even hourly, if the Financial Director has enough time. If you have a software for management accounting, you can receive up-to-date info that is formed based on your documents whenever you need it.

Accounting is all about "raw" numbers. Management Accounting allows us to work with more detailed data. The objects of Management Accounting are not limited to cash flow, they also include products, groups and types of the products, your employees and divisions — including production facilities, units, and departments.

Implementing Management Accounting allows us to keep track of the dynamics, be it the dynamics of the development or the possible negative growth. For example, you could take care of seasonal factors in advance — they would be shown in the system based on the analysis of the previous periods. A prognosis helps reorganize the business and get additional revenue.

Let’s imagine a founder of several legal entities that work simultaneously. The difference between accounting and Management Accounting is obvious: you can’t merge the finances of separate legal entities into one report. One company — one accounting report, it’s that simple. However, Management Accounting allows to consolidate reports of the different legal entities into one.

FinPlan can help with that, too. Project companies can see their consolidated reports on all legal entities in one place. That includes p&l and cash flow statements, budgeting, report on the projects, BI analytics, and visualization.