Management accounts contain pertinent financial information in the form of profit and loss accounts, balance sheets and cash flow analyses. Prepared by your accountant, these are normally reviewed on a monthly or quarterly basis.
Although time-consuming, taking the time to review the information yourself will give you a much more thorough understanding of the financial position of your business. Not only does it provide you with a bird’s eye view, it can also pinpoint problem areas or areas of concern that your business might currently be facing such as slow sellers, operational margins and indicating sales volume. These assist when making sure that you have sufficient stock and staff to meet demand.
Regularly reviewing your management accounts helps you analyse your business and can give an indication of what’s trending or changing by comparing year to year sales. It also provides a scope of how productive your business is which makes way for diversification and new focus areas for growth. These concrete facts ultimately give you the confidence to take that next step in growing your business.
Having a positive cash flow is one of the most invaluable assets to have which is why it is important to keep these documents and accounts up to date. In this way, they make preparation and planning for positive cash flow in the foreseeable future achievable which may come in handy during less productive periods.
Reviewing your management accounts in a timely manner will reduce year end accounting review costs by addressing issues as they arise rather than all at one time at year end and it will assist your accountant with tax planning and rebates.
Having your finger on the pulse when it comes to your financial status helps to better equip you and your business for the future; making those short, medium and long-term financial goals attainable.