Management Accounts: Why Are They Important?
During this critical time when many businesses are looking to seek financial assistance via the Coronavirus Business Interruption Loans, the importance of accurate and timely management information in helping you to successfully secure such funding is of huge importance.
We know that many small businesses lack the staff and expertise to report the numbers the banks need.
Why Management Accounts Are So Important?
Management accounts are financial statements that contain information like your profit and loss account, a balance sheet, and a cash flow forecast. They are usually produced on a monthly or quarterly basis, but why are they important, and why should you have them prepared?
Management accounts give you up-to-date financial information of your businesses. When you have an accurate overview of your business today you can take better decisions for tomorrow.
For example, this will help you see operating margins, or identify products that are selling slowly. You will be able to monitor sales volumes which will help you plan things like staffing levels more efficiently. And you will have more information to plan your stock levels to ensure you have enough to meet demand.
Management accounts also give you more control over your business. You will be able to identify trends in sales such as comparisons with the same trading period in previous years, or changes in volumes of particular products.
You will also have more control over your costs when you prepare and study management accounts. It is easy for costs to get out of control, particularly during busy trading periods, but management accounts give you an instant and easy to digest overview. With this information you will be able to identify areas where you can spend less, but get the same result.
Helps You Grow Your Business
When you are able to identify trends in sales quickly you will also have better information for planning growth, diversification or expansion. Without the information all you have is gut-feeling, and in business that can cost you dearly.
Improves Cash flow
Preparing up to date management accounts will allow you assess your current financial position. This will provide the basis for better cash flow forecasting and planning.
Helps With Tax Planning
When you have accurate and current information on your business, you will also be able to plan your tax liabilities better especially with the various taxation payment deferment opportunities provided by the government.
Reduces Year End Audit and Accounting Costs
Finally, your year-end accounting costs should be lower when you have a system that involves the regular preparation of management accounts as issues and queries are flagged up early and can be resolved immediately, rather than trying to do everything at the end of the year.
Why use Rayner Essex’s management accounting services?
We have an experienced team who can work using cloud and traditional accounting, taking into account your needs and requirements.
We can help with the preparation of timely and accurate management accounts providing you with important up-to-date information on the financial performance of your business.
We can provide Key Performance Indicators (KPIs). The analysis and commentary will provide you with valuable insight and understanding of the finances and performance of your business.
We will work with you to save you money. Your management accounts will offer the opportunity to identify any inefficiencies and stop costs from running out of control. We will use the management accounts to consider remuneration and tax planning, reducing your tax bill where possible.
Use of Cloud-based solutions
We can use most of the main cloud-based solutions such QuickBooks, SAGE and Xero, Receipt Bank and others.
We can also assist in the production of budgets, forecasts, cash flow projections and the comparison of actual performance against budgets, provided with clear and concise commentary.
For further information and advice please contact one of our experts listed on the right or if you would like us to keep you up to date by email please click this link to subscribe.