Management accounts

Management accounts

What are management accounts

Management accounts give you the power to make decisions about your business in real-time. A good set of management accounts contain vital information about your sales and expenses. They can be as detailed as you like and are essential for insights into your business. For example, you can set up your accounting system to record the revenue and costs of a new product launch. You can then compare performance accross various locations and/or different selling mediums. Armed with this information you an make business decisions such as adjusting selling prices, allocating additional resource, buying/selling/transferring stock, creating promotions - the opportunities, as you can see - are endless. Always remember "the numbers never lie".



5 essential elements in a set of management accounts

Detailed analysis of costs
You will be astonished when you see what your spending your money and how easily this can spiral out of control. Keeping a close eye on your costs ensures your are not caught out at the year end. It is also imperative to compare actual costs with budgeted costs. This allows you to critically evaluate any abnormalities. It is easy to spend money - but hard to earn it!

Identification of key customers/suppliers/trends
It is pointless spending money on marketing/promotions without identifying your targets. Do you invest time on your biggest customers or try and focus on new wins, how long do you customers take to pay you, can you extend payment terms with suppliers. Again, the options are endless.

Custom ratios and KPIs
Gross profit margins, net profit margins, productivity, number of customers retained, new business won, the list goes on. Without this information you have no control.

Tax forecasts
Tax is a cash cost to your business. Don't wait to the end of the year to find out what your bill is - plan ahead to ensure you understand how much working capital you actually have. PAYE, VAT and corporation tax have payment deadlines - factor this into your cash flow.

Profitability reporting
The whole point of being in business is to make profits. Keep an eye on this at all times and constantly compare with your competitors.

How we can help

Create a management reporting pack tailored to get the best results for your business, discuss strategies to grow your business and check performance against competitors.

See our blog on the difference between year end accounting and management accounting.