You may think that Management Accounts are pretty standard, and they should be, but a recent event proved that isn’t actually the case! An audience of more than 500 business owners was asked a series of questions about their Management Accounts, to assess the quality and completeness of the information they contain. The results were truly shocking, even based on our experience!
Out of the 500 business owners present, only a very small handful were able to vouch for their Management Accounts when all of the aspects listed below had been considered, and that included us! Seriously, there cannot have been more than twenty people who were able to confirm the quality of the information that they are using to make the key decisions in their business.
The other 96% of the audience couldn’t confirm that their Management Accounts:
- Were produced monthly.
- Showed current month, year to date and prior year comparisons.
- Had been prepared using a cloud accounting package.
- Had been reviewed and adjusted for:
- Loan / HP interest
- Income received in advance
- Expenses paid in advance
- Stock / WIP
- Fixed assets
- Included a list of accounts receivable and payable.
- Included a Budget vs Actual variance.
These are the features of a really good set of Management Accounts. Not all of these features are relevant to every business of course, but you need to be sure they have been considered for the end result to be worth working from. Unless this is the case the contents of the Management Accounts may not be accurate, and may actually be misleading, suggesting the business is doing better than it is.
There are also two other items that form the final pieces of the puzzle to help business owners to monitor the progress of a business towards achieving its goals:
- A cashflow statement and forecast
- Predetermined KPIs
Are you confident that your Management Accounts and Information would stand up to this level of scrutiny? If not, and you would like to talk to us about ensuring you are getting the maximum benefit from them, do get in touch! You can find out more about Management Accounts here.