What is Managed Accounting and How it Can Help in Business Growth?

Introduction

Business owners often struggle to navigate the complexities of managing day-to-day finances while also trying to grow the company. The constant balancing act between tracking expenses, handling payroll, and preparing taxes leaves little time for strategic planning. This is where managed accounting comes into the picture; a solution that transforms this struggle. 

By integrating advanced cloud-based software, automation, and expert accountants, managed accounting takes over the burden of financial management. Suddenly, tasks like bookkeeping and compliance are seamlessly handled, freeing up the business owner to focus on scaling the business. The precision and insights provided by it not only ensure accuracy but also pave the way for smarter financial decisions and sustained growth.

In this blog, we will discuss managed accounting, explore its benefits, and discover how it can contribute to business growth.

What is Managed Accounting?

Managed accounting is a scalable solution that combines cloud-based software, automation technology, and expert human accountants to handle a company’s financial needs. It goes beyond traditional bookkeeping by offering a comprehensive approach to managing financial tasks like payroll, tax compliance, and financial reporting. 

While automation enables businesses to streamline operations and improve operational efficiency, thus enhancing accuracy, human expertise ensures that more complex tasks like strategic financial planning, detailed financial analysis, and compliance are handled with care. By integrating these elements, managed accounting offers a flexible, cost-effective way to maintain financial health and support business growth.

Three components of Managed Accounting 

Managed accounting is built on three key components that work together to streamline financial processes and enhance business growth. Each of these elements plays a crucial role in optimizing a company’s financial operations. Here’s a breakdown of these components:

1. Cloud-based financial management

With cloud-based platforms, such as cloud-based accounting software businesses can access their financial data anytime, anywhere, and from any device. This ensures real-time visibility into critical financial metrics, making collaboration between teams and accountants effortless. Cloud systems also offer strong security features, including encryption and regular backups, protecting sensitive financial data from breaches or loss. Additionally, scalability is a key advantage, allowing businesses to expand their accounting capabilities as they grow without investing in costly infrastructure.

2. Automation of routine task

Automation is integral to the efficiency of managed accounting. Routine and repetitive tasks like journal entry, invoice processing, data entry, payroll, and bank reconciliations are handled by software that operates with precision and speed. By automating journal entries along with routine tasks businesses can drastically reduce the risk of human error and speed up financial processes. Automated workflows also streamline approval processes, ensuring that transactions and payments are completed on time, leading to better cash flow management. By automating these mundane tasks, businesses can achieve faster turnaround times and gain more accurate financial data for decision-making.

3. Expert human oversight

Despite the advantages of technology, human expertise is crucial for overseeing complex financial functions and making strategic decisions. Managed accounting services employ skilled accountants who go beyond number crunching. These professionals ensure regulatory compliance, handle tax filings, and interpret financial data to offer actionable insights. They provide advice on cash flow management, budgeting, and financial planning to help businesses navigate challenges and capitalize on opportunities. This expert oversight ensures that automated processes are optimized and that the business’s overall financial strategy aligns with its growth objectives.

Importance of Cloud-Based Software

Cloud-based software is a cornerstone of managed accounting, offering numerous benefits that enhance financial management and operational efficiency. Here’s why cloud-based solutions are so important:

1. Accessibility and flexibility

Cloud-based systems allow businesses to access financial data and applications from anywhere, at any time, and on any device with an internet connection. This flexibility supports remote work, enables real-time collaboration, and ensures that business owners and accountants can stay connected and make informed decisions regardless of location.

2. Real-time data and updates

Cloud software provides up-to-date financial information, allowing businesses to monitor their financial health in real time. This immediacy helps in making timely decisions, spotting trends, and responding quickly to changes in the financial landscape.

3. Scalability and cost-effectiveness

Cloud-based solutions can easily scale with a business’s growth, accommodating increasing data volumes and expanding functionalities without requiring significant upfront investment in hardware. This scalability helps businesses manage costs effectively and invest resources where they are needed most.

4. Enhanced security and compliance

Reputable cloud providers offer robust security measures, including data encryption, regular backups, and access controls, to protect sensitive financial information. Additionally, these platforms often include compliance features that help businesses adhere to accounting standards such as GAAP and IFRS, regulatory requirements, and other industry standards.

5. Integration and automation

Cloud-based software often integrates seamlessly with ERPs, and other business applications, enabling streamlined workflows and automated processes. This integration reduces manual data entry, minimizes errors, and improves overall efficiency in financial management.

Importance of Expert Accountants

Expert accountants play a critical role in managed accounting, offering valuable insights and oversight that technology alone cannot provide. Here’s why they are essential:

1. Strategic financial guidance

Expert accountants bring in-depth knowledge of financial planning and analysis. They provide advice on budgeting, cash flow management, and long-term financial strategies that help businesses make informed decisions for growth.

2. Compliance and regulatory expertise

Accountants ensure that the business adheres to tax laws, financial regulations, and industry standards. Their expertise helps avoid costly penalties and ensures accurate reporting for audits and legal requirements.

3. Customization and adaptability

Every business has unique financial needs, and expert accountants tailor-managed accounting solutions to fit those needs. They can customize reports, develop specialized financial strategies, and adapt to changing business circumstances.

4. Risk management

Expert accountants assess financial risks, identify potential challenges, and implement strategies to mitigate them. Their proactive approach helps businesses safeguard against financial pitfalls.

5. Quality control and accuracy

While automation handles routine tasks, accountants review and validate financial data, ensuring accuracy in reporting and preventing errors that automated systems may overlook. This enhances the overall reliability of financial management.

How Can Managed Accounting Help Your Business Grow Faster?

Managed accounting can help your business grow faster by streamlining financial processes and providing valuable insights that support smarter decision-making. Here’s how:

1. Improved efficiency

By automating routine tasks like bookkeeping, payroll, and invoicing, managed accounting frees up time for you to focus on growth initiatives. This reduces administrative burden and speeds up financial processes.

2. Cost savings

Outsourcing accounting functions eliminates the need for an in-house team, reducing labor and overhead costs. This allows you to allocate resources toward expanding your business.

3. Expert financial insights

Managed accounting provides access to experienced accountants who offer strategic advice on budgeting, cash flow management, and financial planning. These insights help optimize your financial health and drive sustainable growth.

4. Better decision-making

With accurate, real-time financial data, you can make informed decisions quickly. Managed accounting gives you a clear view of your financial performance, helping you identify opportunities and risks more effectively.

5. Scalability

As your business grows, managed accounting can easily scale with it, ensuring your financial systems keep pace with increasing complexity without needing major infrastructure investments.

How Can HighRadius Enhance Managed Accounting? 

The HighRadius Record-to-Report Software enhances managed accounting by automating the financial close process, improving accuracy, and providing real-time financial insights. It streamlines tasks like journal entries and account reconciliations, reducing manual effort and minimizing errors. With seamless ERP integration, it centralizes financial data, ensuring quick access to accurate reports and compliance with regulations. Solution dashboards and analytics offer clear visibility into financial performance, enabling better decision-making and strategic planning.

On a broader note, HighRadius offers a cloud-based solution that helps accounting professionals streamline and automate the financial close process for businesses. We have helped accounting teams from around the globe with month-end closing, reconciliations, journal entry management, intercompany accounting, and financial reporting.

Our Financial Close Software is designed to create detailed month-end close plans with specific close tasks that can be assigned to various accounting professionals, reducing the month-end close time by 30%.The maker checker workflow allows users to assign and track tasks for each close task category for input, review, and approval with the stakeholders. 

Our Account Reconciliation Software provides an AI-based rule discovery engine set that can configure matching rules and match line-level transactions from multiple data sources to automate various transaction processing required for month-end close. Our solution has the ability to prepare and post journal entries, which will be automatically posted into the ERP, automating 80% of your account reconciliation process. 

Our AI-powered Anomaly Management Software helps accounting professionals identify and rectify potential ‘Errors and Omissions’ throughout the financial period so that teams can avoid the month-end rush. The AI algorithm continuously learns through a feedback loop, which in turn reduces false anomalies. We empower accounting teams to work more efficiently, accurately, and collaboratively, enabling them to add greater value to their organizations’ accounting processes.

FAQs

1. What is a managerial accounting example?

Managerial accounting uses financial data to help businesses make informed decisions. For example, it analyzes production costs to determine whether to manufacture in-house or outsource. This approach goes beyond basic accounting, offering insights that guide strategic decisions and maximize efficiency.

2. What are managed accounting services?

Managed accounting services combine cloud-based software, automation, and expert accountants to handle financial tasks like bookkeeping, payroll, tax compliance, and financial reporting. These scalable solutions go beyond basic accounting, offering a comprehensive approach to streamline financial management.

3. What is the purpose of managerial accounting?

The purpose of managerial accounting is to provide detailed financial insights that help managers make informed, data-driven decisions. It focuses on budgeting, cost analysis, performance evaluation, and financial forecasting to guide internal business strategies, improve efficiency, and maximize profitability.

4. What are the three pillars of managerial accounting?

Managed accounting is driven by three key components: cloud-based financial management for real-time access and security, automation of routine tasks to enhance efficiency and accuracy, and expert human oversight for strategic guidance and compliance. Together, these elements streamline financial operations and support growth.