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Reasons you might benefit from having management accounts


Do you walk with your eyes closed or do you prefer to look where you are going? Do you wait until your annual accounts have been prepared to see how your business has done? By this stage the data is out of date and of little use for decision making. Having up to date management accounts is a good place to start to have better control over your business.

More informed decision making

Having recent financial performance data gives you an accurate picture of where your business is now. This means that decisions can be based on fact rather than just hoping for the best, making your decisions more effective in achieving your goals.

Peace of mind

Do you worry about your business? Knowing exactly how your business is performing will ensure you keep in control and can focus your efforts where you need to.

To check your business is on track to achieve your goals

Every journey should start knowing where you are heading, including your business one. Targets can be set which can then be compared to actual results to ensure modifications can be made where necessary so your business remains on track to achieve your goals.

Timely decision making

If your decision making is currently based on your annual accounts, this information is well out of date even when accounts are prepared soon after the year end. For example, if profitability drops early in the financial year it could be many months before this become apparent. Having quarterly or monthly management information means problems or opportunities can be identified quickly. Problems can soon be rectified and opportunities exploited.

As a tool to identify trends in your business

Annual accounts are just that. A summary of a whole year. Regular management accounts will enable trends to be monitored which cannot be picked up from annual figures.

Working capital management

If you know where your business is financially, this clear understanding will help you monitor your cash flow and get it under control.

Accountability

Management information helps staff awareness of being accountable for budgets. Engaging staff to take accountability for their department can help to keep costs under control. Accountability is about understanding what the numbers actually mean and then taking appropriate action for improvement.

Early detection of fraud

Sadly, fraud happens. However, a regular review of your finances leaves little in the way of hiding places for those involved in fraud. Lengthy delays between financial reviews means dishonest activity could go undetected for longer.

Advance warning of tax liabilities

Not only will management information provide details of taxes already due but should also allow an estimate of forthcoming liabilities, avoiding nasty surprises further down the line. Management information can also facilitate tax planning.

Dividend planning

Under UK law, a company can only pay dividends out of distributable profits. Management accounts provide details of what profits are being generated.

To get the most out of management accounts, you need fully understand the data, interpret the results and take remedial action.


Please don't hesitate to contact us if you'd like to stay on top of your business' financial decisions.

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