Managerial accounting: What is it and why choose this career?

If you’re just beginning your accounting career, you may not know where to start. The endless opportunities within the industry are exciting but can feel a little overwhelming without guidance. 

Let's look at one area of specialization: managerial accounting. Find out what it is, how it differs from financial accounting, why or why not it may be a great choice for you, career opportunities in the field, and how you can be successful as a managerial accountant. 

What is managerial accounting?

Managerial accounting is the process of gathering, measuring, analyzing, interpreting, and communicating financial data for the internal decision-makers of an organization. 

Managerial accountants create detailed reports to help business leaders make informed, financially savvy choices for the good and growth of the organization. They play a vital role in internal financial decisions and goal-setting, performing important tasks such as:¹

• Creating financial, diagnostic, and forecasting reports 
• Product costing and valuation 
• Cash flow analysis 
• Budgeting 
• Inventory turnover analysis 
• Financial leverage metrics 
• Identifying financial opportunity 
• Focusing financial allocation 
• Constraint analysis 
• Accounts receivable (AR) management 
• Identifying efficiency problems and proposing solutions 

Financial accounting vs. managerial accounting 

While both financial and managerial accounting rely on similar analytical and mathematical skills surrounding finances and their use, there are major differences in the purpose and scope of these two professions. 

Pros and cons of working in managerial accounting 

Pros of managerial accounting: 

1. Salary 

Managerial accountants earn a great living, averaging about $95,659 annually across the US⁴. This number varies by location and seniority; however, with the national salary nationwide at just $59,428 per year⁵, you can expect a competitive pay rate even in an entry-level position.  

2. Career opportunities and growth 

Organizations nationwide are relying more heavily on managerial accountants to inform their financial decision-making. If you decide to pursue a career in managerial accounting, you can expect a great employment outlook, with numerous opportunities for career advancement as you gain more skills and experience. 

3. See results of your work 

It feels good to see the payoffs of a job well done. Since managerial accounting focuses on solving immediate problems and helping increase efficiency, you can enjoy watching your hard work be implemented and the benefits that brings to your organization. 

4. Influence in major decisions 

The leaders of your organization will rely heavily on your advice. Your reporting will play a major role in the financial decisions they take, and you will get to be involved in exciting company improvements. 

5. Not restrained to GAAP 

Because managerial accounting is intended for internal use only, you don’t have to follow GAAP standards and regulations. In this sense, it’s thought to be easier than financial accounting, allowing you more freedom to develop reports that are tailored to specifically (and only) what your organization needs. 

Cons of managerial accounting: 

1. Long hours 

Managerial accountants have a lot of work to get done. They may be tasked to provide insight into a situation where every moment unsolved is extremely costly. They must put in long hours to provide reporting as quickly as possible, while also making sure that all data has been included and analyzed for the most accurate results. 

2. High pressure 

There is a lot at stake when you work in managerial accounting. Company leaders look to you to inform their financial decision-making. With hundreds of thousands of dollars at stake in each of your reports, any mistake on your part could result in big losses⁶. 

3. Challenges in data

Working as a managerial accountant can be difficult, especially if you enter a company that doesn’t have organized or accurate data. You must be focused and knowledgeable so you can jump into messy data that needs to be untangled before you can investigate or analyze it further. However, if those puzzles motivate and excite you, you may welcome the challenge and never feel bored on the job. 

4. Employee discontentment 

Because solving bottlenecks often means restructuring, your advice may be met with negativity from others in the organization. Change is uncomfortable, and your efforts to streamline and create efficiency might also make waves in team dynamics. The good news, however, is that the organization’s leaders will be the ones to front most of the pushback, so you will likely be shielded from feeling those effects.⁷ 

Careers in managerial accounting 

Managerial accounting offers many specializations and job opportunities. As we mentioned, the job market is ripe for managerial accountants (and accountants, in general), which means that you have more possibilities to pick an area that truly interests you. 

Managerial accounting skills 

To work in this arena, you must bolster certain skillsets. In addition to the foundational skills you need in any accounting-related position, it’s important to be especially strong in: 

• Leadership skills 
• Communication skills 
• Management, interpretation, and application of financial data 
• Excel spreadsheets 
• Math 
• Computer skills 

Managerial accounting jobs 

Job titles for those in managerial accounting may vary greatly. As you advance in your career, you may gain more leadership positions in similar style roles (i.e., financial analyst vs. senior financial analyst vs. financial analyst director). 

These are just some of the career opportunities that await managerial accountants. 

Certifications to boost your managerial accounting career

Earning advanced certifications and trainings will help you open more opportunities and further your career. For those interested in managerial accounting, a Certified Management Accountant (CMA) certification is extremely beneficial, giving you both higher knowledge and more esteem to work in this field. 

Earning a CMA certification requires studying for and passing the CMA Exam, a 2-part test covering Financial Planning, Performance, and Analytics (part one) and Strategic Financial Management (part two). It may seem like a strenuous process, but Becker offers CMA Exam review that guarantees you will pass. 

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