10 reasons why management accounts should be a primary tool in business planning:
External factors can directly and indirectly affect your business, causing serious distortions to your expected results. Keeping up-to-date figures will help you recognise these ‘blips’ early on. You can then adjust your activities accordingly.
When dealing with your bank, management accounts are invaluable. Especially relevant if you are looking for finance to grow your business.
Management accounts and budget forecasts will help you analyse how new staff make a contribution to your business, thereby justifying your investment in them.
You may decide to sell all or part of your business. Providing potential buyers with up-to-date information helps negotiations.
Is your business subject to seasonal variations? With management accounts you can see how patterns arise, so you can take action to remove the variances. This could be by changing the level of output at certain times, or planning sales promotions for seasonal products.
Examine different areas of your business in isolation. Compare different activities and their contribution to the bottom line.
Management accounts enable you to analyse your figures objectively to see where costs can be reduced. Often clients are surprised at the results produced by management accounts, when true costs are allocated against specific sales areas.
Are you outgrowing your premises? Undoubtedly any potential new landlord will want to see your track record over the past few years. Your ability to afford a larger rent will be clearly demonstrated by management accounts and budget forecasts.
Having management accounts available at Board meetings will reduce the time spent debating which business areas are more or less profitable and help focus on productive strategic planning.
They can be as detailed as you wish, the format is totally flexible and tailored in a way that is most helpful to you in running your business. Based on facts, management accounts provide critical information to aid your decision making.
Want more data at your fingertips?
We can produce management accounts on a regular basis, usually these are monthly or quarterly. Or if you would prefer to create management accounts yourself, we can provide a tailored template to obtain the required information.