What Are Management Accounts? & Why Do I Need Them?

Management accounts are a set of financial statements prepared either monthly or quarterly, which provide clear insight into the financial ... Services Journal GetInTouch Forsmallbusinessowners,book-keepingandaccountingfallsunderthecategoryof‘necessaryevil’.It’sajobthathastobedone(ormostlikelyoutsourced)tomeetyourlegalobligations. Howevernotalltypesofaccountingareaimedatmeetingyourstatutoryobligations,somearedesignedtogiveyoubetterinformationtohelprunandgrowyourbusinessandthiscanhaveBIGbenefitsforSMEs. Managementaccountsareasetoffinancialstatementspreparedeithermonthlyorquarterly,whichprovideclearinsightintothefinancialtradingpositionofyourbusiness. Theyaren’trequiredbylaw,andtheydon’thavetobefiledwithHMRC-butthey’llputyoumoreincontrolofyourfinancesthaneverbefore,supportingthegrowthofyourbusiness. Tofindouthowmanagementaccountscanbenefityourbusiness…ArrangeADiscoveryCall Whataremanagementaccounts? Managementaccountsforsmallbusinessestypicallyincludeaprofitandlossaccount,balancesheet,cashflowstatementandashortreport.Youcanputtheaccountstogetheryourself,ormorerealistically,anaccountantcandoitforyou. Ifyou’reusingacloudaccountingpackagelikeXero,it’seasytosupplythenecessaryinformationtoyouraccountantsotheycanproducethemanagementaccountsonyourbehalf. Whydoyouneedthem? Tosuccessfullygrowyourbusiness,youneedtobeabletomonitoryourmoneyandmeasureyourperformancethroughouttheyear.Thatmeansmorethanjusttheoccasionalglimpseatyourbankbalance. Indeed,ahealthybankbalancedoesn’tnecessarilyindicateahealthycompany.Yourcashbalanceissimplyasnapshotintime,andfailstoconsiderimpendingoutgoings,tradingconditionsorthestateofyoursalespipeline. Managementaccountsliftthelidonallthisinformationandwhenyouareabletoidentifytrendsinsalesquicklyyouwillalsohavebetterinformationforplanninggrowth,diversificationorexpansion.Withouttheinformationallyouhaveisgut-feeling,andinbusinessthatcancostyoudearly. Thismeansyoucan… GrowYourBusiness Whenyouareabletoidentifytrendsinsalesquicklyyouwillalsohavebetterinformationforplanninggrowth,diversificationorexpansion.Withouttheinformationallyouhaveisgut-feeling,andinbusinessthatcancostyoudearly. Otherbenefitsofmanagementaccountsinclude: Makingmoreinformeddecisionsbasedonup-to-dateinfo Ratherthanwaituntiltheyearendtoseeyourresults,you’llbeabletoidentifyadverseoperatingtrendsinreal-time,andtakeactiontocorrectthesituation. Measureperformanceofyourbusinessandindividuals Managementaccountsprovidethebasisforreportingkeyperformanceindicators.KPI’sareaninvaluabletoolifreportedregularly,andinatimelymanner. Gaincontroloveryourcashflow Managementaccountshelpyouspotcash-flowproblemsbeforetheyhappen,andhelpyouanalysethemoneygoingoutofyourbusiness.Couldyoucutyouroutgoings?Areyougettinggoodvaluefromyoursuppliers?Totalbusinesscostsareoflittlevaluewhenmanagingabusiness-youneedtoknowhowandwherethatmoneyisbeingspent. Planyourtaxanddividendpayments Withup-to-dateinformationavailableeachmonth,youcanplantaxanddividendtransactionswithgreaterconfidence.Managementaccountsforsmallbusinessescanhelpmaximisethepotentialbenefitsofpayingdividendsratherthansalary. Detectfraudinyourbusiness Aregularreviewofyourbusinessfinancesmeansthere’snoplacetohideformalpractice.Thelongerthetimebetweenfinancialreviews,themorechancethereisthatfraudulentactivitycouldgoundetected-atgreatcosttoyourbusiness. Reduceannualaccountingcosts Havingregularmanagementaccountsproducedreducestheamountofworkrequiredatyearend.normallyreducingthecostofproducingyourannualaccounts. Tofindouthowmanagementaccountscanbenefityourbusiness…ArrangeADiscoveryCall Insummary Thesearejustsomeofthebenefitsofmanagementaccountsforsmallbusinesses.Fromreducedaccountingcoststolowertaxliabilityandevenabetterrelationshipwithyourbankmanager,thereareplentymoreadvantagestodiscover.Forthebiggerpicture,contact BRAccounting&BusinessServicesLtdforyournoobligationmeeting. Whoweare. BRAccounting&BusinessServicesLtdareafirmofManagementAccountantsbasedinPlymouth,Devon.WearespecialistsinthefieldofManagementAccounting,witharangeofservicesdesignedtoassistSMEbusinessownerstoharnesstheirfinancialdatainordertogrowtheirbusiness. 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