What are Management Accounts?
Management Accounts is the name given to the prompt production of similar information to that which is included in the annual statutory accounts. They include the key numbers from the business that can be used to monitor its performance.
Key figures include the following:
- Gross Margin
- Progress against predetermined budgets
Usually produced monthly or quarterly, and very quickly after the period end, the information contained within them is highly relevant and enables you to regain control of the business if necessary, giving you the flexibility to react to changing conditions.
Why would Management Accounts be helpful?
They can provide real value to any business owner, but particularly one looking for growth, and are especially powerful for decision making:
- Can you afford to offer an enhanced salary package to retain or recruit a key member of staff?
- How much can you afford to spend on marketing to entice that ideal customer to come on board?
- If you were to receive the response you’d like to a marketing campaign, could you finance the growth that may come with it?
Management Accounts can also help you sleep well at night, knowing that you’ll have funds to pay salaries, the tax man and other commitments.
Without accurate management information, most business owners would effectively be guessing at the results. Knowing where you stand within the business empowers the decision makers and inspires confidence.
How can we help?
An initial meeting identifies the key areas of focus within the business, and the required frequency for your management accounts. We’ll also discuss how the business books are kept at the moment, identifying any areas that could be streamlined or improved to make the process of producing the management accounts easier. We’ll work closely with your bookkeeper to set up the process internally, or, if preferred, can produce the accounts on your behalf.
Once prepared, it’s essential that you can interpret the information the management accounts contain and from there use the knowledge to move the business forwards. If the knowledge to understand the detail is already within the business, delivery may be as simple as sending the Management Accounts to the business owner, or it could include their presentation, explanation and discussion at a regular management meeting. The most common choice is usually somewhere in between!
More information can be included around predetermined Key Performance Indicators (KPIs) relevant to the particular needs of the business, or that can be used as part of our Outsourced FD Service. In this case, the Management Accounts and KPIs become the basis of our ongoing discussions.
If it’s easier for you, we can manage the whole process of producing your Management Accounts, from core bookkeeping, to presenting the end result in a way you’ll easily understand, allowing you to concentrate on running the business from an informed position. Contact us now to talk through the process.
Many of the areas that form part of a set of Management Accounts can be presented graphically which makes life much easier if you are one of many business owners who struggle to ‘see’ their numbers. Find out more here.
Unsure how long you must keep your business or tax return records, and in what format? Watch this to find out!
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