Why Do Businesses Need Management Reporting in Singapore?

Every organizational management needs to have an accurate understanding of where the business stands. It makes periodic business reports a must-have for every company. This is the reason management reporting is an indispensable part of every business.

Traditionally, we have seen the use of legacy systems to prepare reports for management. Even today, we will find many businesses resorting to it. However, given their technical outlook, it can be difficult for a layman to operate them effectively. 

This often resulted in a severe lag time between the need and the actual delivery. Many people also criticized these systems for not being forward-looking and unable to cater to change.

The modern-day management reporting in Singapore is a hassle-free affair. There is a plethora of software that can produce results in real-time. These are also adaptive and can conveniently deliver the results that management seeks.

This article discusses the need for management reporting in Singapore.

What is management reporting?

The primary aim of management reporting is to inform managers about every aspect of the business. It extracts data from all the departments and culminates them into KPIs that are helpful in successfully running the business.

In most cases, the management accountants send management reports monthly to managers, executive managers, and governing bodies. The receiving parties then analyze them to understand the entity’s current position and take requisite steps to help it reach its goals.

In the last few years, we have also seen management reporting inculcating external KPIs that affect the company’s performance. For example, it includes supplier behaviour, customer preferences, and regional demand shifts to give a broader view of its performance and its reasons.

Characteristic of a good management report

An effective management report should have the following characteristics –

• It should include the right KPIs that will help management make relevant decisions
• It should be created with end goals in mind
• It uses a plethora of graphics and highlights the most important KPIs to ensure that people don’t get overwhelmed while reading it
• It should be skimmable, i.e., there should be enough white space, a mix of colours, and a combination of text and graphics
• It should take a clutter-free approach to ensure that the managers understand the presentation the way it is to be understood
• Management reports are explained in a story mode, i.e., it includes all the relevant data with ample context and meaning

What are management reports used for?

Here are some of the ways businesses use management reporting –

• Determine relevant benchmarks
• Utilize critical KPIs and performance metrics to track performance
• It helps in developing cohesive plans
• It showcases the progress of each department
• It helps in undertaking continual business growth
• It helps managers understand the finer details pertaining to their departments

How is management reporting different from financial reporting?

Financial reporting comprises statements that the management sends out to all the stakeholders of the company. These are mandatory for all businesses and reflect the business position on a particular date (end of a quarter or a financial year).

It includes –

• Cash Flow Statement
• Profit and Loss Statement (audited financial statements)
• Balance Sheet
• Notes to Accounts &
• Change in Equity

Here is how financial reporting differs from management reporting –

Different audience

Financial reporting caters primarily to external stakeholders. It includes shareholders, government, creditors, and debtors.

Management reports, on the other hand, are strictly for the in-house management team.

Difference in perspective

The financial reports are an overview of the past performance of the company. They often cannot showcase product-wise or department-wise performance (unless they are its subsidiaries).

In contrast, a management report employs a forward-looking perspective and predictions on the possible outcomes based on current business decisions. It also gives management the flexibility to bifurcate their decisions product or department-wise for deeper insights.

The difference in standards that rule them

Financial reports are made strictly in adherence to rules set by ACRA and the Companies Act. Therefore, businesses must meet all the rules laid down for them.

Management reports are internal documents, and they do not have a set pattern from an external body. The management can tweak its format to ensure maximum benefits from it.

Contents of a management report

A management report must have all the vital information.

Here are the essential contents of a management report –

Branded cover page

The report caters to the higher management. So it is imperative for it to have a professional outlook and include the organization’s logo as its cover page.

Mission statement

The first part of a management report should clearly state the company’s mission, vision, and values.

Table of contents

Like any other report, a management report covers a plethora of topics. Therefore it must have a content page at the beginning.

Time-stamped footer

Every such report must include a time-stamped footer that would be customizable as per the company’s needs. Usually, elements such as the document’s name, copyright information, and confidentiality clauses are included in the footer.

Strategic goals pages

A management report must have a detailed page to outline the company’s strategic goals or objectives.

Departmental scorecard

It is imperative for a management report to include scorecards for departments that are in focus. Many of them also have organizational information for comparison.

Project overview

Since these reports are monthly, there is no need to include all active projects. Instead, these can highlight only those that drive current management strategy.

Charts and graphs

These reports are rich in graphics. So it is usual to find several charts and graphs to present KPIs, goals, and more to ensure high readability.

White space for action items

Since these reports are handed in during a meeting, a hard copy must include ample white space to help capture the relevant pointers.

Importance of management reporting

Management reports play an integral part in helping managers run their businesses efficiently. Even though their scope is extensive, it is the specific reports that help management the most.

Here is why effective management reports are vital for every organization –

• These reports help a business understand its current position and compare it with its peers
• With the help of relevant metrics, management reports provide vital insights into the business’ health and growth
• These help business set up relevant operational and financial benchmarks to gauge your current performance
• These help you figure out trends that can be beneficial or detrimental to your organization
• The insights garnered from these reports act as the base for improving communication across the board
• These ensure that the business and its department follow best practices to attain financial and operational goals in the future. They help eliminate the communication gap and figure out collaboration opportunities within the organization with improved clarity
• The KPIs act as a motivation for the entire team to work in unison and achieve both common and specific goals. It improves the overall productivity of the workforce
• If you are using the right KPIs, a management report can act as the roadmap to success. It fosters continual and holistic growth enabling the business to attain long-term success

Helpful tips before you prepare management reports

Here are some tips to help you design an effective management report –

Understand the organizational strategic goals

The base of the management report is the strategic goals of the organization. This is why every item you decide to include must-have relevance and context. Typically, setting two or three goals will help you define performance.

Showcase the difference between expected and actual performance

A management report is a forward-looking document. It is vital for you to present targets set in comparison with tangible results. This will help managers gauge the performance of their decisions with ease.

Present comparable past information

Often, the managers are interested in understanding the present performance with regards to the past performance in the same period. It helps them compare the relative growth of the organization and the impact of their decision-making.  

Management reports help managers manage the organization better

We have come across managers who rely merely on financial statements for their decision-making. However, if managers want to be proactive, it is imperative for them to understand KPIs regarding their decisions.

An effective management report helps foster growth and augment the productivity of the workforce. Also, no two companies will have the same content in their management report. It is because every manager understands success differently and has varying KPIs to measure their performance.

If managers skip monthly management reports, there is a high chance of them missing out on critical information that may hinder growth. It can also lead to them making decisions that are not in the best interest of their departments and the organization.