When it comes to managing finances and developing business strategies, there are different types of accounting professionals you can bring on board to help. One of them is the management accountant. Unlike chartered professional accountants who focus on historical data for external reporting, management accountants are instrumental in helping businesses make strategic decisions that will drive their future success.
This post will explore what management accounting entails, highlight the difference between managerial accounting vs. financial accounting, and explain the unique benefits of working with a Chartered Global Management Accountant (CGMA) like our founder, Harry Launchbury.
What is Management Accounting?
Management accounting, also known as managerial accounting, involves providing financial information and insights that help internal business leaders make better, more informed decisions.
According to the Chartered Institute of Management Accountants (CIMA), “day to day, they interpret financial data, prepare reports, and use business knowledge to help management make decisions. They’re always looking to the future and figuring out ways to improve things for the company.”
Managerial accounting examples include cost analysis, budgeting, and forecasting, all of which help businesses optimize their operations, increase efficiency, and plan for long-term growth.
Management accountants are also responsible for providing reports on business costs, cash flow projections, sales revenue, and accounts receivable to inform business strategy and operational decisions.
Managerial Accounting vs. Financial Accounting
When it comes to understanding the role of a management accountant, it’s essential to distinguish between managerial accounting and financial accounting.
Chartered Global Management Accountants (CGMAs) are experienced and trained in both financial accounting and management accounting. But the key difference between the two is that while financial accounting focuses on historical data and external reporting, management accounting is about using current data to make forward-thinking decisions.
- Managerial Accounting: This branch of accounting is internally focused. Its goal is to provide business leaders with the tools they need to make data-driven decisions and run their operations efficiently and profitably. Management accountants focus on the future and offer strategic insights, identify inefficiencies, and prepare budget reports and trend analyses to help a company meet its goals. They look at both qualitative and quantitative data.
- Financial Accounting: In contrast, financial accounting is externally focused and looks at quantitative data only. It involves creating financial statements such as the balance sheet, income statement, and cash flow statement, which are used by external stakeholders like investors, creditors, and regulatory bodies. The main objective of financial accounting is to present a clear, accurate, and legally compliant picture of a company’s financial performance.
Key Functions and Benefits of Management Accounting
Now that we’ve covered the basics, let’s dive into some of the key functions of management accounting and how they benefit businesses:
- Understanding and Controlling Costs: Cost and managerial accounting help businesses understand their cost structure and identify areas where they can reduce waste or improve efficiency. For example, by examining cost reports and analyzing production costs, a management accountant can recommend ways to save money and increase profitability.
- Budgeting and Forecasting: Budget reports and cash flow projections are essential tools for any business. Management accountants help create realistic budgets, track performance against those budgets, and forecast future financial needs. This helps businesses plan for the future with confidence and ensures they have the necessary resources to meet their goals.
- Strategic Decision-Making: Through tools like margin analysis and constraint analysis, management accountants help businesses identify bottlenecks and inefficiencies in their operations. By doing so, they provide actionable insights that guide strategic decisions, whether it’s pricing strategy, cost adjustments, or new investments.
- Improved Financial Planning and Performance Management: By constantly analyzing financial data and offering strategic recommendations, management accountants help businesses improve their performance over time. They also play a key role in managing corporate accounting to position businesses for growth and profitability.
Why Work with a Chartered Global Management Accountant (CGMA)?
You may have heard of Chartered Professional Accountants (CPAs), but Chartered Global Management Accountants (CGMAs) are different. While CPAs focus primarily on financial reporting and compliance, CGMAs are management accountants who specialize in strategic financial leadership.
CGMAs can fulfill the functions of CPAs, and they have training and experience in financial accounting. However, their curriculum goes beyond this to include advanced training in finance, operations, strategy, and management.
So why should you work with a CGMA like Harry Launchbury? Here are just a few compelling reasons:
- Global Recognition and Expertise: The CGMA designation is recognized worldwide as a symbol of excellence in managerial accounting. CGMAs like Harry have undergone rigorous training and have a deep understanding of the financial, operational, and strategic aspects of business. With this designation, Harry brings a global perspective to every client engagement and delivers the highest quality financial insights.
- Strategic Leadership: Chartered Management Accountants are able to work with all sizes and types of businesses. With a background in corporate accounting and years of experience advising multi-billion dollar companies, Harry uses his expertise to offer tailored, strategic advice that drives operational efficiency and supports smarter, more informed decision-making.
- Forward-Thinking Approach: Unlike traditional accountants who may focus more on compliance and historical data, a CGMA provides forward-looking advice that helps businesses navigate financial challenges, identify opportunities for growth, and forecast future success.
- Tailored Financial Solutions: Harry takes a personalized approach to accounting. He works closely with each client and customizes his financial strategies to the specific needs of the business, corporation, nonprofit, or charity.
Understanding the Designations: CGMA vs. CIMA vs. CPA
The distinction between CGMA, CIMA (Chartered Institute of Management Accountants), and CPA often comes up when businesses are considering hiring an accountant. Here’s a breakdown of these designations:
- CGMA vs. CIMA: The CGMA designation is jointly offered by AICPA (American Institute of Certified Public Accountants) and CIMA. While CIMA focuses on providing training for management accountants, the CGMA certification takes that training a step further, focusing on strategic financial leadership at a global level. In short, a CGMA is a CIMA-trained professional who has completed the required education and passed a case-study-based exam to show proficiency in management accounting and business strategy.
- CGMA vs. CPA: CPAs are experts in financial accounting, taxation, and compliance. They typically focus on historical data and external reporting, whereas CGMAs specialize in managerial accounting and provide forward-thinking insights for business strategy and growth. While CPAs are critical for tax and regulatory matters, CGMAs like Harry are better equipped to provide strategic financial guidance and help businesses optimize their operations.
The Bottom Line
While both CPAs and CGMAs are well-versed in compliance and tax-related matters, working with a CGMA like Harry Launchbury offers a unique advantage for businesses that need strategic financial leadership. Whether you want to optimize your costs, plan for the future, or navigate complex financial decisions, a management accountant with the CGMA designation will provide the clarity, confidence, and expertise your business needs to thrive.
Looking for a Certified Management Accountant in Alberta or New Brunswick?
If you’re interested in a partner who can offer tailored, strategic financial advice, reach out to Launchbury Accounting & Bookkeeping Solutions today. Book a consultation to explore the benefits of working with a New Brunswick and Alberta Chartered Management Accountant.
