What Are Management Accounts?
Management Accounts are a set of financial statements, prepared periodically e.g. monthly or quarterly, enabling business owners to understand the financial trading position of the business and make decisions based on the data. Management Accounts typically include a profit and loss, balance sheet, creditors and debtors listings. Good quality monthly management accounts produced by Fairmile will be hugely beneficial to your business. They will aid you in making the right decisions, ensuring your business is more efficient and potentially more profitable.
Benefits of Monthly management accounts:
- Controlling costs - Reviewing monthly management accounts ensures you are able compare costs at regular intervals, identifying savings that can be made.
- Comparing budgets and forecasts - Often reality is different to expectations re business performance - Budgets and forecasts can easily be integrated into monthly management accounts, providing a visual aid re specific causes of variances, enabling prompt improvements, ensuring your business remains on track.
- Cash planning - Cash in the bank sometimes gives a false sense of security - Monthly management accounts make it easy to quickly identify gaps, enabling solutions before problems become critical.
- To monitor working capital - Monthly management accounts will allow you to monitor how much customers owe, how much is owed to creditors, and monthly movements in those figures.
- Avoid surprises at year end –Business owners usually have a grasp of sales / regular costs throughout the year. However, without monthly management accounts, its difficult to monitor anything unusual / to factor in accounting concepts such as accruals and depreciation, resulting in year end results differing from expectations. Monthly Management accounts ensure visibility to the full picture as the year progresses.
- Identifying seasonal differences - Monthly management accounts enable you to track / analyse each individual month, so that you can clearly see the impact and better plan for the next year.
- Tax Planning and Dividend Payments –With up to date date information, a director/owner can plan with greater confidence. This approach may be helpful in legitimately reducing the tax liability of the company, and to maximise the potential benefits by payment of dividends, as opposed to salary.
- Staff Management - Accounts are a useful visual aid to focus performance. It's often helpful to share monthly management accounts with members of staff, to explain reasons for reducing costs / increasing sales etc.
- Raising Finance - If you are raising finance from a bank or investor, a good business plan, supported by monthly management accounts, can dramatically improve your chances of success, especially if the business performance has changed significantly since the last financial year end. They also illustrate the business is in control regular monitoring of finances.
- Detection of Fraud - A regular review of financial performance of the business will increase the possibility of detecting fraud or other malpractices.
Access these benefits by contacting Fairmile today - When you sign up to our monthly service, you’ll receive comprehensive monthly management accounts which include a Profit and Loss, Balance Sheet and a full commentary section highlighting key information in a format that’s easy to understand. You can also track your profitability at any time via your bespoke ‘dashboard'. We’ll also take the time to explain them in a language you’ll understand.