How can management accounts benefit your business?
Management accounts are monthly or quarterly reports, providing you with regular updates on the financial performance of your business.
These reports will give you a clearer outlook of your financial position and will allow you to reflect on your past decisions and actions while looking ahead to your future goals and ensuring you are on the right track.
However, many businesses don’t have management accounts because they are unsure of how beneficial they will be.
How will they help your business?
It makes good business sense to have management accounts, so that you are aware of your current path and the direction in which you are heading.
They allow you to evaluate past performance, as well as prevent cash flow troubles that may lie ahead, while also highlighting what needs attention to improve and fuel growth.
Analysing your profits and losses, cash flow and liabilities can help you to spot patterns, predict future revenue and set realistic objectives.
Plus, a good set of management accounts is always desirable for potential investors, as it provides a window into your financial health.
What should be included in a management account?
Typically used by owners, managers, investors, banks, tax planners and more, there is a variety of information that should be included, such as:
Balance sheet – This summarises the assets of your company’s owners, its liabilities, such as debts, and the value of its owner’s investment known as shareholders’ equity.
Profit and loss statement – This allows you to assess monthly revenue and understand your level of profitability.
Key performance indicators (KPIs) – KPIs are the goals you are working towards, such as growth in revenue, gross profit margin, inventory turnover, and how many sales you wish to achieve.
Cash flow statement – When paired with cash flow forecasting, a cash flow statement tells you how much cash balance to expect in the future and how much loss you will incur.
We can provide you with management accounts, for a clearer outlook on your business’s finances. Contact us today.