How to Use Financial Data to Always Stay Ahead of the Competition

Publication Date: 13.03.2024

Grażyna Sadowska-Malczewska
Managing Partner, PKF BPO

Rachunkowość finansowa, rachunkowość zarządcza

A Valuable Resource That Needs Proper Utilization

As an entrepreneur, you’re likely familiar with the feeling of decision paralysis and fatigue due to the flood of tasks and incoming information. Some of us experience this state perpetually, which psychologists refer to as information stress. Our role is to learn to filter out informational noise and extract valuable content to benefit our business.

Time is also a crucial aspect here. In the era of artificial intelligence and other digital tools, anyone can perform data analysis. However, the market advantage goes to the company that utilizes data and makes the right decisions faster than the competition. Even the most extensive and thorough analyses have an expiration date, especially in a dynamically changing market and constant geopolitical shifts.

Combining the effective use of two factors: KNOWLEDGE and TIME is what management should strive for to ensure their decisions are based on solid foundations.

Financial vs. Managerial Accounting: How to Use Data

To manage informational chaos, company management doesn't need to have expertise in economics or finance. The key is to choose the right tools, especially in medium and large enterprises where data is abundant and comes from various sources. An effective solution is a well-designed financial controlling system and the establishment of an internal department or outsourcing financial and managerial accounting.

When clients ask me about the differences between these services, I usually explain that the main difference lies in the RECIPIENT of the data produced:

● Financial accounting is a legally mandated duty, primarily aimed at external recipients such as tax offices, banks, lessors, or shareholders. It provides them with an image of the company’s financial health (assuming, of course, that the books are kept accurately and serve as a good foundation for further analysis).

● Managerial accounting is implemented voluntarily. It aims to provide information to the supervisory board, management, partners, and all who influence decision-making and long-term development strategies. It affects decisions the company broadly defined will make to achieve its goals.

Na poniższej grafice znajdziecie siedem głównych obszarów, które odróżniają rachunkowość finansową od zarządczej.

Fast and Effective: How Managerial Accounting Works

In comparison to accounting, managerial accounting operates in the here and now. Its main focuses are:

The TIME in which data is provided.
Selecting information valuable for managers in current conditions to aid in making accurate decisions.

As emphasized, financial accounting must always be ready. Even the best-prepared data, if delivered a day too late, won't be valuable in building a competitive edge or preemptively addressing emerging risks if the market situation changes in the meantime.

Na poniższym diagramie, w obrazowy sposób przedstawiłam wpływ czasu i doboru odpowiednich danych na wartość zarządczą, powstałe ryzyka dla firmy oraz wykorzystanie szans na budowanie przewagi organizacyjnej:

Rachunkowość zarządcza kompiluje dane pozyskane z wewnątrz firmy (głównie z księgowości, ale też od działu sprzedaży, działu HR, marketingu), a następnie analizuje je na podstawie informacje pozyskane spoza organizacji. A więc bierze pod uwagę między innymi:

aktualną sytuację geopolityczną,
zmieniające się wytyczne prawne,
wskaźniki makroekonomiczne,
trendy i ryzyka występujące w branży.

Efektem tych analiz powinny być nie tylko informacje, ale też scenariusze działań przygotowane na przewidywane zmiany lub wydarzenia, tzw. czarne łabędzie, których w ostatnim czasie widzieliśmy niemało.

No Templates, Everything Tailored

Managerial accounting and controlling systems are not standard products. For them to be valuable, they must be tailored to each organization since no two companies are identical. While creating such a system, management (or, if opting for outsourcing, the external firm in close cooperation with management) should meticulously consider all company processes and assign responsibilities for their key elements. It is also important to identify bottlenecks causing information flow delays.

One key task of managerial accounting is to provide information about the profitability of products or services, considering not just the overall company result (provided by the annual report created by accounting), but the results of individual units. This way, by breaking down information into product/service groups, projects, brands, or customers, we can assess what the company earns from and where it loses. Despite good overall financial health, there may be areas requiring significant corrective actions or strategy changes. Addressing these in a timely manner can prevent major issues in the long run.

Integrated Accounting and Controlling
Integrating managerial accounting with financial accounting and controlling creates added value for external stakeholders. It enhances the brand’s standing, often positively influencing decisions made by stakeholders such as investors or partners. Additionally, company owners, knowing their organization’s strengths and weaknesses, gain greater peace of mind and decision-making confidence in a dynamic economic environment. Above all, they gain knowledge and a time advantage in utilizing it compared to competitors who do not leverage these opportunities.

"True knowledge is knowing the causes" - Aristotle

As you may have noticed, financial accounting answers not only the question of "how much?" but also "why?", provided we can skillfully analyze the data supplied.

In managerial data analysis, expert knowledge from various fields (accounting, HR, finance, legal, tax) is useful. I'm not suggesting that every owner or manager must acquire knowledge in all these areas, but rather build an appropriate advisory team. At PKF, when working with our clients in managerial accounting and controlling, we often engage our experts from different departments to create analyses and scenarios. These include lawyers of various specializations, economists, accountants, HR specialists, payroll experts, tax advisors, IT specialists, and business analysts. This broad advisory team is one of the most valued aspects of our cooperation by our clients.

It's better to prevent than to cure. Therefore, even if your company is just developing, it’s better to consider creating a cohesive financial-managerial system that will evolve in parallel. This is a much more certain method than reconstructing information retrospectively when it becomes necessary.

Would you, as a business owner, want your company to be managed by trial and error? I don’t think so. Business development and management should be based on solid foundations, which PKF is happy to help you establish.

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How to Use Financial Data to Always Stay Ahead of the Competition

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