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Management accounts are different from your annual accounts.
They provide you with useful information to help run your business, and your management accountant produces them for you more regularly than annual accounts.
These financial reports will provide you with a complete picture of your company’s finances, permitting you to acquire the depth of knowledge and insight needed for good decision-making.
As chartered accountants specialising in helping small businesses, we can support your enterprise with management accounts.
Management accounts are a set of financial reports, which you generally produce quarterly or monthly. These are not the same as the year end accounts you prepare for HMRC.
Using management accounts, you can monitor the performance of your business regularly.
The information in these reports should help you maintain control over your business, and take any necessary action based on the information these accounts give you.
Unlike annual accounts, management accounts are not something you must produce by law, but they can be hugely valuable in supporting your business, its goals, and strategies.
Every business needs three fundamental financial statements:
- Profit and loss
- Cash flow
- Balance sheet.
Managing these aspects of your finances should be a routine part of your bookkeeping. But analysing what these figures mean is the function of your management accounts.
Management accounts can help you spot patterns, or flag up concerns that will influence your business planning.
They should provide an insightful analysis of your financial data.
Besides analysis of profit and loss, cash flow and your balance sheet, you can expect to include key performance indicators in your management accounts. These may use a range of measurements, such as customer satisfaction, or how effectively your business is delivering on its targets.
Because management accounts are not mandatory, there’s no set way of doing them. They should be specific to your company, and to your business needs.
Ultimately, the finished structure of your management accounts will depend on what information is important to you.
Management accounts can give you proper visibility of what is going on in your business.
The principle is; if you can measure something, then you can improve it. This applies to the type of information you should include in your management accounts.
Key objectives of management accounts include:
- Measuring past performance to drive improvement
- Avoiding cash flow problems
- Knowing where to focus your efforts to increase profitability
- Gaining future clarity about your business.
There’s no right or wrong answer to this, but at a minimum we would recommend you complete management accounts on a quarterly basis.
Remember, they’re providing you with valuable information for you to work from and base your business decisions on.
Therefore, the more up to date this information is, the better informed you’ll be.
Some companies opt for monthly management accounts for these reasons. It will depend on what information you require, and how you plan to act on it.
No. Management accounts are not a legal requirement.
In fact, you do not have to produce them at all, but they’re a useful means of exercising control over your business.
Think of it this way: where will you stand in relation to your competitors, depending on whether they do, or don’t, have management accounts of their own?
The more you understand your business, the more you can improve it.
If you use a chartered management accountant to produce your management accounts, you’re drawing on a well of professional experience and insight.
A qualified accountant will be able to drill down into the details but also look at the wider context, providing a management consultancy service to you. This is based on your accounting data.
Providing sound management accounts with the right analysis, tailored for your specific business needs, is a skill. It makes sense, therefore, to use a skilled practitioner for this purpose.
How Chartered Management Accountants Can Support You
Headquartered in London, Venn Accounts are chartered management accountants who utilise cloud accounting software to ensure our clients’ accounts are updated in real time, wherever you are in the UK. We then collate and analyse this type of information for your management accounts.
What we bring to the table is an expert eye for detail, combined with a personalised management accounting service that is shaped around the needs of your business.
Working closely with you in this consultative role, we’ll provide you with the insights and advice you need to plan ahead for how you want your business continues to grow.
We combine traditional accounting values built on trust with modern, cloud-based accounting technology.
For more details about how we can help you with your management accounts, please call Venn Accounts on 02080882590, email firstname.lastname@example.org or complete our contact form and one of our senior accountants will get back to you as soon as possible.