Management accounts are a type of financial report, which provide insight on the financial performance of your business. They are called management accounts because they are typically used by business owners and management to inform strategic decision making.
In our opinion not enough businesses have management accounts prepared. They often rely on an annual set of accounts that are only produced because the law says that they have to be.
When completing a set of annual accounts the information could be anything from 12 to 21 months old. Often if a business is experiencing any difficulties, waiting for the year end is too late to make decisions and turn things around.
We believe that businesses should have better control and more frequent information than a once a year formality.
There are a number of questions we often ask business owners to see how informed they are about their business finances.
At a basic level, this could be; how are you doing, have you had a good month? They often reply ’yes, we have been busy’ We would then ask, ‘but have you made any money, and have your customers paid?’
Busyness is often confused with things going well. However, there is such a thing as a busy fool. In our opinion, there is nothing worse, then businesses working hard for little profit and often not even being paid.
So…. How are YOU doing? Do you know at any given time how your business is performing? Can you make sound decisions each day based on how things are going? Would you be able to submit management accounts in a short space of time if the bank needed them to support any lending?
Are you, or your Finance Director, too emotionally involved in the internal day to day running of the business to address and develop accurate monthly management reports? Is there too much time spent ‘firefighting’ rather than analysing your KPIs to show you are on track to deliver each year?
We will help bring clarity to your data so you can focus on growth and outcomes. With a clear view of the road ahead your short-term problems will be removed to allow you to work towards your long-term goals.
You may need monthly management accounts or even quarterly management accounts to help inform you of how things are developing your business.
Monthly or Quarterly Management accounts should include a profit and loss statement, a balance sheet, the cash position and also report on any Key Performance Indicators (KPIs) that you are working towards.
This is a minimum and can be expanded on depending on what your individual business needs. For example an overall profit and loss statement maybe sufficient. You may be happy with knowing the overall turnover, costs, profit for that given month. Let us be honest, this would be much better than purely waiting for year end accounts.
However, you may find it beneficial to know the turnover, costs and profit, per product or service, or per customer. How do you define your best customers are these the ones that you do the most sales with? But are they profitable? Do they ring you 5 a times a day and are that draining that actually, there is no profit.
We could even provide turnover and profit per employee, per sales rep, or individual fee earners. Who is your best member of staff? Is it really who you think it is because he or she shouts loudest?
If you are not on the ball and think that Footprints Accountancy and management accounts will help. Please give us a call and we can discuss your requirements and subsequent costs.
Need help with management accounts?
To find out more about our management accounts services, contact us today.