What is management information?
Management information is the umbrella term to describe the data businesses collect – however more specifically, it is the data that helps a business move forward, make changes, and grow. It has no set style – and can be anything from qualitative customer reviews to quantitative cash flow statements.
How can MI be used?
The purpose of management information is to analyse the data. It has no purpose if it is collected and not used. The aim of the data is to use it to improve your service/products and general business performance. This means management information should be analysed and used for forecasting and adaptation.
Who should be using management information?
Every business, no matter what size, will be collecting and using management information every day. However, in smaller organisations, the CEO will pay attention to MI from all departments – while in larger enterprises, the CEO is likely to focus mainly on financial MI, for there will be teams and department heads who will manage other types of MI. Ultimately, however, management information is used by people of all levels within a business.
Why is management information important for small businesses?
Small businesses may be under the illusion that because they are not yet as established, they do not need to collect, store or analyse financial management information.
However, as a business becomes more and more established, this data from previous years is more fundamental than ever. Further, businesses often struggle to take that next step and become more established without the data in the first place. Financial management information holds the key to savvy, futureproof business decisions which will enable your business to grow.
What financial MI should I be focusing on?
As management information does not solely refer to financial data, we’ve collated 8 types of important financial MI small business owners can leverage.
• Cash flow statements • Sales, costs and profits • Sales by region/customer/department • Profit by product/service • The number of debtor days • The number of creditor days • Gross profit ratio • Net profit ratio
Criteria for collecting useful financial management information
For financial management information to serve its purpose, it must be accurate, relevant, timely and consistent.
Data that is not accurate is immediately useless, no matter what type of data it is, and inaccurate data could lead to significant business challenges further down the line.
It’s also fundamental that financial management information is relevant – it should always align with the business objectives.
Financial management information should also be timely – with the data being reviewed and analysed within the relevant time frame to be useful for the business objectives.
Finally, management information should be consistent in it’s collection and presentation. This makes it possible to review in years to come, analyse trends and make actionable changes. If data is different upon each collection, it makes evaluation much harder.
Outsourcing your financial management information
Getting started with financial management information can be an overwhelming step – and if you’re new to it, it might take months, if not years, to get to know your data and how to best utilise it.
Outsourcing your financial management information to financial experts at The Finance People, you can guarantee a panoramic view of your business’s financial activities.
At The Finance People UK, our experts have years of financial management information under their belts. We have found that small and medium sized businesses often do not have the in-house capability to leverage financial MI to it’s greatest potential. That’s where we can help. We’ll help you to collect, analyse and evaluate key financial management information to drive your business forward.