Why your business should be using Management Accounts

Why your business should be using Management Accounts

Management Accounts are regularly prepared reports intended for internal management and external stakeholders and funders.

They contain key financial information about a business to show its performance.

Whilst these are not mandatory, using Management Accounts can allow for better-informed decision-making and closer monitoring of progress towards goals and targets.

What should a Management Account include?

For many businesses, Management Accounts will include the same things. However, depending on the size and complexity of your company, they can be customised to include the information that you need.

In general, Management Accounts should include:

-        Profit and loss report detailing your company’s revenue, costs, and profits

-        Balance sheet showing your company’s assets, liabilities, and equity

-        Cashflow statement and forecast showing your company’s cashflow throughout the accounting period

-        Key performance indicators (KPIs) measuring your company’s performance, including sales growth, profitability, and feedback

-        Budget comparison that highlights your company’s performance against its budget

-        Analysis and commentary that sums up the above information and highlights any trends and issues that need addressing.

Who are Management Accounts for?

There are no specific recipients for your Management Accounts. They are designed to be seen by those who need financial information about your business, but this will vary depending on the size and structure of your business.

In short, Management Accounts can be seen by anyone who has a stake or interest in the finances of your business. This includes but is not limited to:

-        Owners

-        Shareholders

-        Board members

-        Senior management

-        Accountants

-        Tax advisors

-        Investors

These people will then be able to make decisions based on the information that they are presented with.

Why are Management Accounts so important?

Regularly collating and analysing financial data in these reports is an excellent tool for ensuring the right decisions are being made for your business.

Without Management Accounts, issues and trends within your company may go unnoticed for long periods. This could lead to a lack of growth and poor decision-making.

Having up-to-date and correct information on hand can help promote the growth of your business. Good, data-driven decisions can help skyrocket your business above your competitors.

Preparing Management Accounts

When it comes to preparing Management Accounts, having an accountant on hand can help you to simplify the process.

They can help you to gather the relevant information and help you to prepare your:

-        Balance sheet

-        Profit and loss report

-        A cashflow statement

-        An analysis of financial data

From here, you can take your Management Accounts to the relevant parties and relay the information.

An accountant will also be able to offer practical business advice and support, identifying your market trends and influencing key decisions.

Get in touch today to find out how we can help you prepare Management Accounts.