Financial Accounting Vs Management Accounting

How is Financial Accounting Different from Management Accounting?

Running any Organization or business is a big challenges. You need to keep a keen eye on the company’s services, process, employee, finances.
For that, you will have to make sure that you are using the business suitable software for the same.
For logistics, you’ve got trucks to manage, drivers to coordinate, and deliveries to tracks. You need to do all these things also while keeping an eye on the finances.
That’s where accounting comes in, but not all is the same. If you’re using are Logistics or Transport Management Software (TMS), you’re already ahead of the game. The software have a ton of features for your financials management.
But do you know how financial accounting and management accounting play different roles in making your business grow?
Let’s break it down in simple terms and see how business software ties it all together to make your financial life easier.

What’s the Big Difference?

First things first, financial accounting and management accounting might sound similar, but they’re like two sides of a coin.

For smaller businesses, you can even treat both of them as same. However, as your business starts growing, you need to differentiate them.

Financial accounting is all about looking back. It’s the stuff you send to the government, your CA, etc. like GST reports, income tax filings, and balance sheets. It’s strict, rule-based, and has to follow laws like the Indian Accounting Standards or GST regulations.

Management accounting, on the other hand, is about looking forward. It’s for you, the business owner, or your managers.

Let’s say, you have a different transport company with multiple branches in Delhi.

Financial accounting is where you will have to fill the returns for the company whereas management accounting is where all the branch manager needs to send the expenses and profile reports to the regional manager.

It’s less about rules and more about insights. It helps the company grow and keep an eye on what other branches are doing. Please note that it could also be from the same branch. Meaning, that management financials or accounting is where you need to send the report to your manager.

Financial Accounting: The “Must-Do” Stuff

As you know from the beginning that financial account is where the legal side of the business comes in.

It’s where all the official stuff happens.

So, you need an accurate track of every rupee you have earned and all the GST you have collected.

Especially for a logistics software, you will have to make sure that your business has track of all the expenses starting from the number of fillets you have to the number of goods you are delivering. Even driver and truck maintenance expenses can be a headache if not done right.

So, financial accounting includes the must-do stuff.

You need to keep track of GST and give the exact billing amount to your Cas for further processing. A GST report is not all that’s required here.

A profit-and-loss statement to show your CA? Just a few clicks.

It even has bank reconciliation, matching your bank records with the software’s data to avoid any mistakes.

Plus, the audit trail feature keeps a log of every financial move. All these things are mandatory and much needed as you will not only have to submit these things to a CA but you will also need it for the future. We have GST integration, E-way bill integration, and accounting reports generation features. All these three features will save hours of your time every single week.

Management Accounting: The “What’s Next” Stuff

Now, let’s talk about management accounting. This isn’t about the past—it’s about the future.

It’s the tool that helps you figure out where your logistics business is headed.

As we have already mentioned, these are the reports that you need to submit to your manager or regional manager.

Are your trucks making enough profit? Should you hire more drivers? Is it time to expand your fleet? Management accounting gives you the insights to answer these questions.

We have the right set of features here to help you. It begins with the basic features such as fleet and driver management. To add a little more, we also have full management. With all these, you can manage your business’s expenses and make decisions based on the previous expenses.

How Accounting Software Brings It Together

Whether you need MIS reports or GST reports, you can generate them with just a few clicks on accounting software. The software allows user to manage

• Consignment stocking and dispatching
• Billing and Invoicing
• Accounts Payable
• General Ledger
• Financial Reporting
• Payroll
• Bank Reconciliation
• Audit Trail
• Tax Calculations 

And all your operations in the easiest way possible.

In this way, the whole business will start making more revenue and sales. If you have not yet digitalized your business management, you need to do it right now. It helps you in various ways. In particular, it removes human error which is the most important part. As we have mentioned in the previous parts, human error in finances can also put your business in a lot of legal trouble. So, you need to make sure that you are removing the error.

Features for Finances Management

The financial management system has various features for automation of logistics and billing. The accounting software is just listed out the features related to counting and finances. That’s how the entire business becomes more profitable and easier to manage.  

• Automated Transport Billing – Creates accurate invoices for every delivery. You can automate most of your tasks.
• E-Way Bill Automation – Links to government portals for quick.
• GST Reporting – Uses GST API to generate tax reports quickly and easily.
• Income Tax Reports – Auto-prepares detailed tax filings for CAs or businesses.
• Sale-Purchase Reports – Tracks all revenue and expenses in one place.
• Bank Reconciliation – Matches bank records with yours. This removes the chances of human error.
• Audit Trail – Logs every financial move for audits.
• Financial Reporting – Gives balance sheets and PnL statements with a click.
• Real-Time Cash Flow Tracking – Shows your money in and out. As it’s real-time, you can easily manage the cash flow.
• MIS & Analytical Reports – Over 40 reports for a full financial overview.
• WhatsApp Integration – Sends invoices to clients instantly.
• Cloud-Based Access – Manage finances from anywhere.
• Multi-Language Support – Use it in any Indian language you want.

Conclusion

To conclude, the main difference between financial accounting and management accounting is that financial accounting is the must-do stuff which includes the GST and other important reports to send.

On the other hand, management accounting is where you need to send the reports to the manager or regional manager for further evaluation of the office expenses and overall business expansion. These are the reports you can send to make further decisions. Bharat Software Solutions (BSS) helps you with both of these reports.