{"id":4241,"date":"2021-08-04T13:22:00","date_gmt":"2021-08-04T13:22:00","guid":{"rendered":"https:\/\/www.bainesjewitt.co.uk\/blog\/?p=4241"},"modified":"2021-08-04T13:22:03","modified_gmt":"2021-08-04T13:22:03","slug":"management-accounts-give-snapshot-of-business-performance","status":"publish","type":"post","link":"https:\/\/www.bainesjewitt.co.uk\/blog\/management-accounts-give-snapshot-of-business-performance\/","title":{"rendered":"Management accounts give snapshot of business performance"},"content":{"rendered":"<p>There are important financial statements in every business including the\u00a0profit and loss (or income) statement, the cash flow statement, and the\u00a0balance sheet. Together, these documents provide important numbers and a snapshot of your finances.<\/p>\n<p><!--more--><\/p>\n<p>To get the most out of these figures, many companies also produce management accounts \u2013 an in-depth analysis of the data. Management accounts aren\u2019t mandatory \u2013 and there\u2019s no fixed way to do them. But they\u2019re invaluable.<\/p>\n<p>For small business owners, book-keeping and accounting falls under the category of \u2018necessary evil\u2019. It\u2019s a job that has to be done (or most likely outsourced) to meet your obligations.<\/p>\n<p>Management accounts are a set of financial statements prepared either monthly or quarterly, which provide clear insight into the financial trading position of your business.<\/p>\n<p>They aren\u2019t required by law, and they don\u2019t have to be filed with HMRC \u2013 but they\u2019ll put you more in control of your finances than ever before, supporting the growth of your business.<\/p>\n<p>Management accounts for small businesses typically include a profit and loss account, balance sheet, cash flow statement and a short report. You can put the accounts together yourself, or more realistically, an accountant can do it for you.<\/p>\n<p>If you\u2019re using a cloud accounting package like Xero, it\u2019s easy to supply the necessary information to your accountant so they can produce the management accounts on your behalf.<\/p>\n<p>Management accounts can:<\/p>\n<ul>\n<li><strong>Monitor growth<\/strong>: You can compare your management accounts monthly, quarterly or yearly to accurately monitor not just your financial growth, but your performance as well.<\/li>\n<li><strong>Plan for the future<\/strong>: You can more accurately forecast your future revenue, or make allowances for doubtful accounts. You might even spot seasonal differences in cash flow, so that you can plan around slower months in future.<\/li>\n<li><strong>Motivate for funding<\/strong>: You can approach investors confidently, ready to answer all their questions about your business performance \u2013 whereas failing to show any will usually result in a swift \u2018goodbye\u2019.<\/li>\n<li><strong>Optimise processes<\/strong>: If clients take a while to pay, you can improve your collection process, or make other credit decisions quickly. If you know which customers pay regularly, you can develop loyalty programmes and attractive offers to reward them.<\/li>\n<\/ul>\n<p>Management accounts help you spot cash-flow problems before they happen, and help you analyse the money going out of your business. Could you cut your outgoings? Are you getting good value from your suppliers? Total business costs are of little value when managing a business &#8211; you need to know how and where that money is being spent.<\/p>\n<p>With up-to-date information available each month, you can plan tax and dividend transactions with greater confidence. Management accounts for small businesses can help maximise the potential benefits of paying dividends rather than salary.<\/p>\n<p>In addition, a regular review of your business finances means there\u2019s no place to hide for malpractice.<\/p>\n<p>Having regular management accounts produced reduces the amount of work required at year end, normally reducing the cost of producing your annual accounts.<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>There are important financial statements in every business including the\u00a0profit and loss (or income) statement, the cash flow statement, and the\u00a0balance sheet. Together, these documents provide important numbers and a snapshot of your finances.<\/p>\n","protected":false},"author":2,"featured_media":4243,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[45,38,24,30,56,31,60,50,120,121],"tags":[],"_links":{"self":[{"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/posts\/4241"}],"collection":[{"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/comments?post=4241"}],"version-history":[{"count":1,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/posts\/4241\/revisions"}],"predecessor-version":[{"id":4242,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/posts\/4241\/revisions\/4242"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/media\/4243"}],"wp:attachment":[{"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/media?parent=4241"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/categories?post=4241"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/tags?post=4241"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}