Many business owners think that Management Accounts are for big businesses, but that’s not the case! Watch this to find out how Management Accounts are relevant for even the smallest business…
Hi, and welcome to another episode of Baranov TV, designed to demystify the world of accounts and tax and to help your business grow.
Now this episode, I want to talk to you about something that’s relatively simple that will enable you to plan properly for the business rather than react to something that’s going on. Something that will show you as quickly as possible if something is happening in the business so enable you to spot that very quickly and react. And something that will enable you to make really good, informed decisions.
And that is management accounts.
Now, management accounts are relevant to any size business so if you’re a larger business or even just a small business or one man band who desperately wants to get a real hold on their business throughout the rest of the year.
They are run in a very similar format to your end of year accounts but because they’re so timely, they’re REALLY relevant.
A good set of management accounts includes a lot of adjustments. They take into account things like:
- loan and HP interest
- income you’ve received in advance
- expenses you’ve paid out in advance
- work in progress
and various other things!
The other thing they also include is the current month or period figures, year to date figures, and a comparison to the previous years’ figures, if those are available, which really enables you to see where you are, where you’re going, and how that compares in terms of the last 12 months.
A good set of management accounts will also include an updated cashflow statement and forecast so you know exactly where you are cashflow-wise and will also include a report on predetermined KPI’s. So if you’ve identified key numbers in your business that are really relevant to you that you want to watch, it would report against those as well.
So, how do you get them?
We can prepare them for you from your cloud bookkeeping software or whatever manner you keep your records in.
But also, it can be done internally. As long as you’ve got somebody internally who has the ability and knowledge, we can show them how to do those. We can give them some training. We can give them some ongoing support until they’re up and running and really confident with them.
So it doesn’t have to be an expensive exercise. It can be one that’s done in-house, but it WILL make a massive difference to your awareness of how your business is running, so we would wholeheartedly recommend them.
If you’d like to talk about management accounts in any more depth or obviously, any other accountancy-related matters, please do get in touch; that’s what we’re here for! I’m going to leave you with that thought and I’ll see you all very soon.