Managerial accounting provides key insights that help a company’s leadership team make many of their decisions. It is used to provide completed, relevant and forward-looking information to facilitate strategic decision-making by the companies’ executives (Bui et al., 2022). Furthermore, today’s experts in accounting focus on aspects such as designing systems, enhancing business relationships, the supply chain, and implementing strategic performance measures (Molis, 2020). The concept is integrated into other management functions in organizations. This paper will, therefore, analyze the relationship between managerial accounting and the current events in the business environment. Consequently, it will evaluate its application in decision-making, human resource management, supply-chain management, marketing, strategy execution, employee motivation, and building relationships.
Decision Making
This department concentrates on generating accounting information for internal consumption by executives and managers. In the current business environment, accountants are required to conduct analyses of several events within companies or organizations to convert data into serviceable information. The executives then use this information to make decisions that will propel the companies forward. Essentially, managerial accountants gather data, make detailed assessment, suggestions and create suitable options (Bui et al., 2022).
They compare the costs of commodities or services against their budgets so as to quantify the business’s plan of operation. Additionally, they assist executives in developing products that meets customer preferences, demands and behaviors, and create superior value items for clients (Nguyen, 2018). It ensures that the knowledge that is assembled is detailed and could be in the form of non-financial metrics. Therefore, personnel in this section serve as strategic partners in the company, and controllers of the organization’s performances and risks.
Strategic Human Resource Management
Human Resource Management has been transforming over the years, moving from personnel management to strategic human resource management. It is seen as an array of activities that focus on coordinating employees to get the best from their skills and expertise for the growth of the company (Zeng, 2018). In this regard, management acts as the internal consultants in firms by providing important information during the formulation of personnel strategies. Methods such as balance scorecards and HR scorecards are developed by managerial accountants to measure the performance of every employee in various companies (Zeng, 2018).
Further, HR managers create links with management accountants to set achievable targets for all workers in many organizations. Likewise, managerial accounting assists firms when deciding on the hiring of new staff and setting wages. It enables them to determine the number of employees they need, what they can spend on salaries, and the revenue they can expect as a result of investing in each personnel.
Supply Chain Management
Supply-chain management can be viewed as a cycle, starting and ending at the customer. It incorporates supply and demand aspects within and across several organizations. Thus, business operations should be seen as one continuous process where companies incur processing costs like material expenses (Zeng, 2018). Therefore, management of supply chain costs is an element of overall expenditure. As a result, information is key to controlling the whole process (Zeng, 2018). The flow of data within firms in the chain requires interaction between managerial accountants and managers.
For instance, while assessing leveraged products, strategic products, and other key products of the supply chain, management accounting is mostly applied. Companies must integrate within the supply chain so that the applications are made efficient. This extends the strategic objectives of accountants to suppliers, customers, and any other relationships within the chain to assist in saving the costs involved (Zeng, 2018). Furthermore, managers are required to improve their original firm structure from resource provision, management-level environment, and decision-making plan to an association design of the supply chain linking upper-node companies and lower-node businesses. For this will enable them to gain a competitive advantage over their rivals.
Marketing
Most companies today apply managerial accounting methods and tools such as sales forecasting, periodic budgets, budgetary control, and variance analysis to provide information for their marketing strategies. Further, they use both fixed and flexible budgets in controlling estimates and generating master budget variances (Ratnatunga, 2020). In addition, a bigger percentage of firms use the managerial costing approach for planning and decision making, however, some follow through by extending it to productivity measurements. Thus, information such as satisfaction, and loyalty provided by management accountants can help firms tailor their business processes to maximize customers value (Nguyen, 2018).
On the other hand, companies use managerial accounting to plan for the launch of new products in the market. It is employed from the initial validation right through execution through a detailed understanding of its abilities as well as a precise perspective on the market in general. Further, management accountants assist firms to work out the quantities they will manufacture. In addition, they analyze and formulate the cost per unit of the new commodities and decide whether or not to employ new staff to deliver the items.
Employee Motivation
Businesses need to provide employees with recognition for their hard work. This encourages and boosts their satisfaction levels so as to continuously deliver their best for the profitability of companies. Therefore, accounting professionals help firms efficiently incentivize workers by establishing the best methods to evaluate their competencies and the right ways to reward them for doing an excellent job (Molis, 2020). Further, motivation includes talent and human capital development to increase their capacities in order to enhance the company’s performance positively (Zeng, 2018). Thus, during the budgeting process, management accountants are expected to include activities such as training and education to ensure company performance over the long term.
Strategy Execution
Companies now use managerial accounting competencies, like performing high-level assessments on business strategy, to investigate external threats to strategy execution. After formulating their objectives, organizations rely on management accountants to design systems that are expected to lead towards achieving the goals of that strategy, in line with the overall performance management vision. This helps the firms determine the underlying factors they care about and then carry out constant measurements on how well they try to achieve those (Molis, 2020). For example, if a company wanted to examine clients’ satisfaction, a metric that cannot be directly observed, it could use the survey method to get responses from them. Measurements ensure that the fundamental parameters that are invisible are captured.
Building Relationships
One of the responsibilities of management accountants in companies is to assist them in developing connections across various business ventures. They are embedded in the marketing, operations, and financial aspects of the organization (Molis, 2020). Further, they cut across departments to help generate information for decision-making by executives and managers. In addition, managerial accounting helps organizations create controls for developing, assessing, and enhancing external cooperation that generates new growth. For instance, management accountants establish and oversee operational audits of vendors in a supply chain (Molis, 2020).
This gives firms confidence that their partners are participating in operations as expected, which increases trust and strengthens relationships. Additionally, companies entrust their management accountants to build necessary controls and measurements that help them eliminate risks such as a partner failing to perform because of their inability to do so and a trading partner taking advantage of them.
Conclusion
The paper analyzed the relationship between managerial accounting and current events in the business environment. It was evident that management accountants conduct assessments and convert data into serviceable information, which executives use for decision-making. In addition, they act as internal consultants for the companies by providing knowledge and intelligence when they are formulating human resource strategies. Further, accountants help organizations get the facts on who to hire, how much to pay, and the revenue expected as a result of investing in recruiting personnel.
In supply chain management, the skill is applied to controlling the process of data flow within firms through the interaction between managers and accountants. Most companies today apply managerial accounting methods and tools such as sales forecasting, periodic budgets, budgetary control, and variance analysis to provide information for their marketing strategies. Companies equally use accountants to work out the quantities they will manufacture, formulate the cost per unit of the new commodities, and determine whether or not to employ new staff to deliver the products. Management accounts determine how staff should be rewarded, their training, threats and risks to the growth of the business, and formulate both internal and external partnerships.
References
Bui, H. Q., Hoa, T. T., Tran, H. A., and Nguyen, N. P. (2022). Performance Implications of the interaction between the accountants’ participation in strategic decision-making and accounting capacity. Journal of Asian Business and Economic Studies. Web.
Molis, J. (2020). How modern managerial accounting practices help companies grow. The Business Journals. Web.
Nguyen, N. P. (2018). Performance implication of market orientation and use of management accounting systems: The moderating role of accountants’ participation in strategic decision making. Journal of Asian Business and Economic Studies, 54 (2), pp. 1-18. Web.
Ratnatunga, J. (2020). Management accounting and marketing in practice, (4th Ed., pp. 145-162). Quill Press, Melbourne. Web.
Zeng, H. (2018). Reciprocal interaction between management accounting and other management roles. Library Journal, 5, 1-8. Web.