Importance of Managerial Accounting in Business Organisations

It has been found that management accounts are invaluable when it comes to a company making important and timely management decisions about their business.
It is clear that different businesses will have different management accounting needs and this will depend on the areas that the business finds are most important to them. A few examples of the areas that may be as follows;

– The sales process: this includes distribution, debtors and pricing.

– The purchasing process – this area includes records of stock levels and creditors.

– Records regarding employees.

– A fixed asset register

Companies are under no legal obligation to draw up management accounts; however, many find that it makes running a business so much simpler if they do prepare the accounts. In fact, many companies produce them as regularly as monthly or quarterly.

Management accounts are usually for analysing the recent past performances of the business and also usually study elements that look at the future of the company as well. This can include looking at profit forecasts, cashflow and sales. The figures found from this analysis are compared against figures that have been gathered from past forecasts and budgets.

Accountant
Download Accountant from (c) Dreamstime.com

The information gathered for the management accounting is usually broken down so that the performance of different parts of the company can all be measured separately to ensure that they are all working to the best of their abilities. An example of this is that a specific product could be monitored in order to see how well it has done across different outlets.

Businesses who are selling a variety of products are advised to produce a financial breakdown for each of them. This will allow you to make sure that very profitable products are not subsidising those that are failing to sell as well.

By organising the financial side of your company in this way, you will be able to monitor trends in the business, therefore highlighting any variations in your income and spending that may require your attention. This will save companies from resorting to taking out large loans in order to subsidise their business and will therefore have a positive effect on the financial side of the company in the long run.

It is clear that different businesses will have different management accounting needs and this will depend on the areas that the business finds are most important to them.

The information that has been gathered for the management accounting tends to be broken down so that the productivity of separate parts of the business can be monitored.

By organising your business in this way, you can see where changes are needed and save yourself from having to take out any large loans .

Video Source: Youtube

The Importance Of Waste Management

Archeological evidence said that humans had a way of managing their waste even before landfills and incinerators were developed. In many archeological sites, dumping pits were discovered where early people were believed to throw in their waste. In the course of history, waste regulations were enacted. This suggests that waste management is not a modern principle but in fact a natural response to existence.

Humans naturally know what to do with their waste as evidenced by the instituted waste management systems in the pre-modern and modern forms. However, along with global industrialization and population explosion, waste production blew out of proportion, endangering the environment and threatening humans and other living things. With the environmental issues raised here and there, there seems to be a need to remind humans of the importance of waste management.

Education and awareness campaigns play a great part here. Not all people after all are aware that the one piece of waste material they are sending to landfills or incinerators constitutes a greater threat to the environment. Presently, calls to recycle and waste reduction are widely active. And various projects and campaigns are launched everyday, adding more noise to the earlier advocacies on proper waste management.

Waste bags
Download Waste bags from (c) Dreamstime.com

The good news is that a good number of the population is increasingly becoming aware of the importance of waste management and is getting involved. However, more need to be tapped. There are still who remain passive. This segment of the population probably knows that proper waste management benefits the Earth and consequently everyone and everything living in it. But only vaguely. The finer and more intricate details are probably not known to them.

Waste does a lot of things. When brought to the landfills, they emit greenhouse gas in the form of methane. Although methane can be used to make energy, it is generally hazardous to health. Wastes buried in landfills also tend to leach chemicals that can contaminate groundwater. Wastes can be incinerated, though. The problem with incinerators, however, is that they also produce greenhouse gas and other forms of toxin such as dioxin. Dioxin is found to cause cancer. Whether waste is brought to a landfill or incinerator, it seems like it is a potential source of pollution and threat to health.

Although indirectly, waste causes resource depletion. This is due to the common buying pattern: buy, throw, and then buy again. As the waste piles up high, the demand for more products also rises, almost exhausting the natural resources. This has a spiral effect, mainly involving threats to biodiversity, deforestation, pollution, and other environmental problems.

Waste management can be part of the solution in two ways: one is through waste reduction, and two through recycling. Consistent waste reduction and recycling activities mean there will be less waste materials to be sent to landfills and incinerators. As such, the emission of greenhouse gas and other forms of pollutant will be reduced by a large percentage. Reusing and recycling of used items will also result in less production of new products. And this helps in the conservation of natural resources.

There is a great need in understanding the importance of waste management because unless it is acknowledged by all people, waste management efforts will not progress to further heights.

Video Source: Youtube

Why Study Management

You may be wondering why you need to study management. If you are an accounting major, a marketing major, or an major other than management, you may not understand how studying management may help you in your career. We can explain the value of studying management by looking at the universality of the management, the reality of work, and the rewards and challenges of being a manager.

The Universality of Management:
Just how universal is the need of management in organizations? We can say with certainty that management is needed in all types and sizes of organizations, at all organizational levels and in all organizational work areas, and in all organizations, no matter what country they are located in. This is known as the universality of management. Managers in all these settings will plan, organize, lead, and control. However this is not to say that management is done the same way. The differences in what a supervisor in a software applications testing facility at Microsoft does versus what the CEO of Microsoft does are a matter of degree and emphasis, not of function. Because both are managers, both will plan, organize, lead, and control, but how they do so will differ.

Graduation students
Download Graduation students from (c) Dreamstime.com
Since management is universally needed in all organizations, we have a vested interest in improving the way organizations are managed. Why? we interact with organizations every single day of our lives. Does it frustrate you when you have to spend three hours in department of motor vehicles office to get your driver’s license renewed? Are you irritated when non of the sales persons in a department store seems interested to help you? Do you get annoyed when you call an airline three times and their sales representatives quote you three different prices for the same trip? Theses are all examples of problems created by poor management. Organizations that are well managed develop a loyal customer base, grow, and prosper. Those that are poorly managed find themselves with a declining customer base and reduced revenues. By studying management, you shall be able to recognize poor management and work to get it corrected. In addition, you shall be able to recognize good management and encourage it, whether it is in an organization with which you are simply interacting or whether it is in an organization in which you are employed.

The Reality of Work:
Another reason for studying management is the reality that for most of you, once you graduate from college and being you career, you will either manage or be managed. For those who plan on management careers, an understanding of the management process forms the foundation upon which to build your management skills. For those of you who don’t see your self in a management position, you are still likely to have work with managers. Assuming that you will have to work for a living and recognizing that you are very likely to work in an organization, you shall probably have some managerial responsibilities even if you are not a manager. Our experience tells us that you can gain a great deal of insight into the way your boss behaves and the internal workings of organizations by studying management. Our point is that you don’t have to aspire to be a manager to gain something valuable from a course in management.

Rewards and Challenges of Being a Manger:
We cannot leave our discussion of the value of studying management without looking at the rewards and challenges of being a manager. What does it mean to be a manager? Being a manager in today’s dynamic work place provides many challenge. It can be a tough and often thankless job. You may have to deal with a variety of personalities and many times have to make do with limited resources. It can be a challenge to motivate works in the face of uncertainty and chaos. And managers may find it difficult to effectively blend the knowledge, skills, ambitions, and experience of a divers group of employees. Finally, as a manager, you are not in full control of your destiny. Your success typically is dependant upon others, work performance.

Despite these challenges, being a manager can be very rewarding. You are responsible for creating a work environment in which organizational members can do their work to the best of their ability and help the organization achieve its goals. In addition, as a manager, you often have the opportunity to think creatively and use your imagination. You help gather find meaning and fulfillment in their work. You get to support, coach, and nurture others and help them make good decisions. You shall get to meet and work with a variety of people-both inside and outside the organizations. Other rewards of being a manger may include receiving recognition and status in the organization and in the community. Playing a role in influencing organizational out comes, and receiving attractive compensation in the form of salaries, bonus, and stock options. Finally, organizations need good managers. Nothing greater ever happens by it self! its through the combined efforts of motivated and passionate people that organizations accomplish their goals. As a manager, you can get satisfaction from knowing that your efforts, skills and abilities are needed. Author of this article also writes articles about cost and management accounting.

Rashid Javed is an Asian author. He writes about financial statement analysis, contribution margin, and Operating Leverage.

Video Source: Youtube

Account Manager vs. Sales Representative Who Makes More

One of the biggest differences between an account manager job and a freelance sales job is in the overall salary. There are many variances depending on commission, but a sales job usually has a higher percentage of commission due to the fact that there is little or no salary included. However, account manager jobs always have a starting salary to build your financial stability off of.

According to pay scale, the average salary for account management jobs varies, depending on the number of years of experience you have in the field. For example, if you have less than a year of experience, your average yearly salary would be approximately: $38,508. For 1-4 years, it’d be around $40,956; 5-9 years of experience, $50,531; for 10-19 years, $58,147; and for 20+ years, the average yearly salary is $59,777. This data is based on salaries all over the country and has been compiled to create a national yearly average. Your salary will depend on the company you work for and the place where you live. At the same time your salary will not include any commission that you make, so you still have plenty of incentives to sell the product and collect your commission each month. If you really push it, you might be able to pull in over 100k, a year. However, since you’re not the one bringing in the leads for the company, you don’t have quite as much control over that. It’s the trade off for having a stable salary.

Download from (c) Dreamstime.com

If you were to look into sales jobs, you’d find that most of them allow you to choose your own hours and bring in leads howsoever you choose. There are many liberties granted to the sales department of most companies. They generally don’t care how you do it, just make sure you do it and do it well. This is why there is generally no salary associated with these jobs. The pay is completely dependent on how much money you make for the company. If you bring in thousands of leads a day, then you’re rolling in the money. That’s a very extreme exaggeration, as most salespeople set goals to simply bring in a handful of leads a day, and that too, if the product they’re selling costs around $100. For the really high priced services and products, they’re lucky to get one or two sales a week! But this is what it’s all about when you’re in sales.

Account management, on the other hand, has much more constant factors at play. Account management careers generally imply that you’ll be working from 9-5, at a desk, receiving calls from leads brought to you by the sales department. You’re handling multiple customers at a time, with all the records in front of you, helping them with their first purchases, or following up with one of their additional purchases. The idea is that you handle a particular customer every time he/she chooses to buy from your company. Since the customer always works with the same sales account manager, there is no need to explain the situation every time a purchase is made from your store. This saves both the account manager and the customer a huge amount of confusion and unnecessary transfers. You know what the previous situation was, and so are better equipped to deal with him/her.

There’s a stable salary for account managers because they are working a set amount of hours, and are retaining the company’s customers. They play a key role in keeping current customers happy as well as closing the initial sale for new customers. As an account manager, you need to know all about the products you’re selling, just like a sales rep, and you need to have a great people skill to be able to work with different personalities. Some customers will be easier to work with than others, and you need to be prepared and willing to adapt your conversation and pitch to accommodate the differences.

If you stick with it for years, you’ll not only see your salary increase, but you’ll also end up working with some of the bigger clients. The company, having had a longer standing with you, will trust you better to handle these major clients; so you’ll find yourself earning much higher commission due to the higher volume of purchases from the bigger clients. Not only will you have the raises that come year after year, but you’ll also have longer standing relationships with the clients you started out with. If you’re still there, they are more likely to continue buying from your company, which gives your boss all the more reason to give you a raise and a bigger bonus. When you work with a company for a long time, you establish great relationships, friendships, and trust with your co-workers and bosses. You have more time to climb the corporate ladder and receive better positions in the company. You also have more time to try out new methods and learn which methods work better than others. With all those years of experience, you’re bound to have your own collection of strategies and methods that work effectively, and you might find yourself in a mentoring position with all the newbies.

When you look at the average salaries for account management jobs, you might be a little discouraged to pursue it as a career. But don’t forget that these salaries don’t include your commission, and you still have a lot of room to increase your monthly wages by selling more products to clients. Also know, that if you enjoy sales positions, account manager positions give you more stability than most sales jobs. You get all the benefits of working with new clients, while maintaining a stable 9-5 job with benefits. So it’s a good deal all around!

Video Source: Youtube