Management accounts help you to stay in control, and inform both day-to-day and strategic decision making. If you have regular board meetings, a set of up to date management accounts can help to both guide the agenda and spark discussions. Here are some of the key reasons that our clients choose to invest in monthly or quarterly management accounts.
Avoid end-of-year surprises
If you leave your accounts preparation to the end of the financial year, it can be hard to budget for tax payments. For instance, what if you do better than you expected? You may not have set enough aside for corporation tax. Or what if performance not been quite as good as you’d hoped? You might have taken out more dividends than the business can afford.
As well as helping you with planning tax payments, regular management accounts also give you the time and knowledge to undertake legitimate tax planning to reduce your tax liability.
Report on the KPIs that matter to your business
KPIs – or key performance indicators – are more than just management speak; they are a vital tool to helping you to understand and run your business. Regular management accounts allow you to select and then report on selected finance-related KPIs that are relevant to your business. For example, you might want to have a clear picture of:
- Sales trends and analysis – which product lines are doing well, which are struggling
- Cost of sales – where money is being spent and any areas for concern
- Conversion of quotations to orders
- Debtors and settlement times
By reporting and analysing KPIs, management accounts can help you and the board to make sound and informed decisions, such as when to make capital expenditure, where to invest, and where to cut costs.
Management accounts can be prepared on a quarterly or monthly basis, depending on the requirements and complexity of your business. Ideally, they should be a part of every growing business’s management information toolkit.