What is management accounts information and why does your business need it?

Management accounts are a summary of your business performance that are prepared on a regularly timed basis (monthly or quarterly is most common) to provide business owners and managers with an up to date picture on how your business is performing, allowing you to make informed strategic decisions. 

A timely set of management accounts will be able to provide you with a clear picture through up to date, accurate information on what's going on with your business and because they are not confined by statutory requirements they can and should be tailored to your specific needs. For example they could provide you with a breakdown of sales and costs by cost centres or tracking categories which is something that would give you a better idea on a per product or service basis what is performing well and possible areas of expansion or development.

Modern cloud based accounting packages, like Xero, are ideal for the preparation of management accounts because they are designed to be up to date and are accessible wherever you are in the world.

Additionally you can strengthen the management accounts information through the preparation of budgets for the year ahead with what you expect to sell and spend then compare those to your actual results and start generating some forecasts. This will enable you to see several strands of information

1. What you expected to happen in the year (Budget)
2. What is happening in the year (Actuals)
3. What you now expect to happen in the year (Forecast)

Using this kind of analysis you can then project some cash flows and predict how much cash you will have in the bank at certain points in time. This might be important to you to recognise if you need short term finance or if you can afford to invest in some expensive machinery to help you business.

The use of management accounts allows you to take control of your business in a proactive way meaning you can look after the long term success of your business with hopefully no surprises.

Prime provides many clients with bespoke management reports suited to the needs of the business. To discuss how management accounts could benefit you and your business please contact Jacob Graham, our business services manager today on 0121 711 2468.