Making the case for management accounts01/11/2022
Management accounts are a series of periodical reports designed to offer information about your company’s financial performance.
They are vital to how you operate, enabling a better knowledge of your present financial position, ensuring you are on the correct road to reaching your goals and not exposing yourself to fresh risks. They are often created monthly or quarterly.
Despite the obvious benefit such accounts provide, many firms do not have them. Some are even unaware of the benefits they can bring to a company’s operations.
What are the advantages of management accounts?
It makes excellent business sense to keep management accounts so that you can see where you are and where you want to go.
They enable you to assess past performance and anticipate potential cash flow issues, while also emphasising what needs to be addressed to improve and fuel growth.
Analysing your earnings and losses, cash flow, and liabilities may assist you in identifying patterns, forecasting future income, and setting realistic goals.
A robust set of management accounts is also always appealing to potential investors since it gives a window into your financial health.
What should a management account contain?
Typically utilised by owners, managers, investors, banks, tax planners, and others, it should comprise a range of information, such as:
The balance sheet, which summarises your company’s assets, liabilities, such as loans, and the value of its owners’ investment, known as shareholders’ equity.
The profit and loss statement, which helps you to examine monthly income and profitability.
Your business’s KPIs (Key Performance Indicators), which are the objectives you want to reach, such as revenue growth, gross profit margin, inventory turnover, and how many sales you are attempting to make.
The cash flow statement which, when combined with cash flow forecasting, shows you how much cash balance to expect in the future and how much loss you will experience.
If you are eager to discover what benefit management accounts could bring to your business, call JW Hinks on 0121 456 0190. Our friendly and experienced team will help you to understand the impact they can have on your business, and are more-than capable of providing them for you on a regular basis.