What are management accounts?
Management accounts consist of reports and accounts, typically produced either monthly or quarterly, that provide accurate and timely financial and statistical information for use by managers, directors and business-owners, as well as investors and creditors.
This information can play a crucial role when it comes to making important business decisions, both in the long-term and the short-term, as well as in determining the viability of certain operational or performance-related goals.
What do they show me, as a business-owner?
Management accounts are, essentially, a regularly recurring “health check” for businesses. The detail they provide is key when it comes to keeping on top of your cash flow and, quite simply, understanding how your business operates.
Whether you’re interested in disposals, or mergers and acquisitions (M&A), looking into expanding, selling or moving premises, or looking to secure funding, there is information, contained within your management accounts, that can be extracted and used to your advantage.
A strong set of management accounts should include a range of evidence, statistics and figures, such as:
- Profit and loss reports;
- Cash flow forecasts;
- Balance sheets;
- Statement of income and;
- Key Performance Indicators (KPI’s)
Combined, these give you an in-depth insight into how your business is functioning and performing now, as well as an insight into how your business may fare in the future – ultimately enabling you to make changes and improvements wherever you see fit, on an ongoing basis.
How will they benefit my business?
Thriving and productive businesses are typically only as successful as their strategies and periodic management accounts should certainly form part of this.
Your business can benefit from the detailed breakdown management accounts deliver – whether it’s setting targets, foreseeing risks and problems, developing new tactics or just taking comfort in the fact that everything is going to plan.
Naturally, a business with only limited knowledge of its strengths, weaknesses and how it is performing day-to-day will struggle to respond aptly to any unexpected challenges which may arise.
Equally, without a sufficient overview of your cash flow, you could be at risk of failing to spot the warning signs of any potential complications until it is too late, but also of neglecting to meet your liabilities as and when they fall due.
Those businesses that are unaware of the importance of management accounts will likely dismiss them as unnecessary. But, in reality, having confidence in your decision-making capabilities at all times is central to running a successful, flexible business – which is why overlooking them can be dangerous.
Management accounts arm businesses with accurate information, to enable them to react in the right way and at the right time.
Here at George Hay, we can assist with the production of regular, timely management accounts. We will ensure that you always have key data to hand, as well as the means to interpret it, to help you make informed business decisions, evaluate your business’s performance and ultimately move your business forward.