In a nutshell, if you want to successfully grow your business you will need management accounts. They are an invaluable way of going beyond the numbers and gaining a greater understanding of your current performance and your future forecasting.
Running a business without management accounts is often compared with driving a car whilst being blindfolded. You have an idea what speed you are doing from the wind noise and vibrations (your sales) but you don’t know what direction you are heading in (your profitability) and you can’t see the obstacles you are about to hit (shortage of cash).
Qualitative and quantitative data is analysed for the purpose of improving efficiency and effectiveness within the business.
Let’s find out exactly how you would benefit from management accounts.
What are management accounts?
Management accounts are a set of financial reports. They are produced for business owners and managers. They give real time information on how your business is doing. As such they include whatever figures are useful for your business. Typically, they comprise of a profit & loss report (an income statement), a balance sheet and a cash flow document. The inclusion of charts and graphs makes it easier to understand what the data is telling you. They are clear and interesting to look at, making trends easier to spot and then explore.
We support you to identify the key performance indicators and drivers for your business.
Why would your business need them?
The main benefits of regular management accounts are;
> they put you in full control of your business,
> you can monitor growth and trends,
> identify successes,
> progress can be easily tracked and measured,
> the data allows you to plan for the future,
> you can avoid cash flow problems,
> they help you to make informed decisions.
Businesses that wait until they see their year end accounts, find that it is often too late to spot trends emerging and can’t identify where cost savings can be made. A reactionary mindset then takes hold rather than a proactive, forward thinking one.
Many businesses don’t know their profitability, margins and trends. It’s a fundamental principle that if you can measure it you can improve it. So assuming you want to increase your net profit, having management accounts is the obvious solution.
The information provided by Management Accounts is designed to inform how each part of the business has been performing, and thereby guide decision making to benefit the future performance of the business. Companies are more willing to try out new product lines, promotions, services knowing there is less risk involved because they are being tracked and monitored.
If you have just released a new product for example, our management accounts will tell you if/when to lower production, increase marketing or change suppliers.
Running a business isn’t always plain sailing. With management accounts you can fix any problems that occur before they cause any damage. We would help you to reduce costs, increase profit and sleep better.
How often are they produced?
It depends. Simas currently create management accounts on a monthly or quarterly basis. We discuss the regularity with you, to agree which would be most appropriate for you and your business.
Tax planning can come from management accounts. Knowing your profits before the year end helps you to plan and minimise your tax bills. Having a separate bank account for tax is a popular strategy amongst successful businesses and syphoning off funds into this account just for tax. This works very efficiently if you have management accounts, knowing how much tax you are likely to pay and then drawing it away from the business, safe in a separate account. Efficient and organised.
If you want to know more about management accounts and how you can be in full control of your business, please get in touch.