We live in the era of data

The importance of budgeting and reporting in a company has long been established. It is widely believed that those with timely and quality information always have an advantage in business. This applies to all, whether it's micro-businesses or large corporations. As a company grows, the volume of data circulating within it also expands. Data, like raw ore, is a natural material that only has a little value once adequately processed. Through processing, data becomes information that can be further manipulated.

Today, various tools are known for processing and presenting raw data: tables, graphs, ratios, leverage, etc.

Established performance indicators have found complete application in management reporting. One indicator managers and bankers favour is EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization). EBITDA shows how much cash a company generates from its operating activities and is essentially the primary driver of cash flow. It has become a favourite term among those who manage companies because it's easy to remember and simple to present. It indicates the liquidity trend, which, if endangered, can cause significant problems and lead to serious operational difficulties.

Managing a company in the modern era is only possible with accurate and timely information. Today, many budgeting models and budget performance analysis techniques are known. From a budgeting perspective, the starting point is sales planning. This serves as the basis for developing budgets for production, procurement, and all other necessary resources.

The initial analysis tracks deviations in value and quantity, but more is needed to provide more significant information for making important decisions. For that, you need to delve deeper into the analysis. For example, segmented tracking of sales by customers, sales channels, regions, etc., contributes to understanding the profitability of products and how they are marketed, differentiates the target audience, and influences further decisions. These are traditional models deeply rooted in our business.

It's essential to briefly review how to plan adequately and, even more importantly, report appropriately to make informed decisions. A company's management can decide about increased market activity for specific products, increasing the sales team either quantitatively or qualitatively, changing sales policies, finding more accessible, if not cheaper, material and financial resources, and directing sales policies toward specific target groups.

The planning and control system is established by monitoring parameters in shorter periods: monthly, quarterly, semi-annually, and annually, focusing on historical data available to the company. Responsible economic entities plan the budget at any given time over the next 12 months, not restricting themselves to the calendar year.

Only continuous and timely monitoring of business changes and the environment allows proactive action on upcoming events and precise estimates of their effects to achieve set goals.

What is the goal of budgeting and reporting for management purposes? The most straightforward answer to this question would be: the pursuit of budgeting and reporting within a company is to compel managers to think ahead, have a tool to measure their own and their employees' performance, plan for obtaining liquid assets in line with the maturity of liabilities, manage accounts receivable and payable efficiently, and monitor exposures to other parties.

Economic entities invest in modern technology to achieve more complex and higher-quality data representation and better tracking of changes in the business itself. With the support of information technology and databases, data modelling is developed. This achieves the rapid availability of parameters for business monitoring and reporting continuity, as well as data protection that the company possesses.

If the importance of investment in modernization and computerization were neglected, there would be a risk of untimely data availability, employees would struggle with "juggling" information, and reports would already be outdated and unusable, detrimental to decision-making.

Information has become a resource that can be a significant source of competitive advantage.

The goal of every company is to achieve maximum profit by applying its strategy without deviating from its defined purpose and mission. Accountants often say that profit is merely an accounting category in balance sheets. Still, with adequate analysis and estimation, including the mentioned reporting and ongoing budgeting, profit determines the level of a company's success. The future growth and development of the company, earnings for equity owners and employees, manager bonuses, and negotiating positions with banks and other financial organizations depend on this information.