What are Management Accounts?
Whilst daily bookkeeping covers all of your transactions, such as the invoices, bills and receipts connected to sales and purchases, management accounts go a lot further in depth. In this blog we break down what management accounts are and why outsourcing them to TreyBridge Accountants is such a savvy move.
What are management accounts?
In a nutshell, management accounts are financial documents that include an in-depth profit and loss report, a cash flow statement and a balance sheet. They can be created on a quarterly basis but many business owners prefer to have them generated monthly, as this gives even greater insight into how the business is performing.
In a way, management accounts are similar to end of year accounts, except that they can be tailored around the needs of the business owner. For example, there may be certain areas of your finances that you would like to inspect more thoroughly than others, in which case they will be given extra focus.
Why are management accounts important?
Whilst outsourced bookkeeping ensures that all of your transactions are accounted for and logged, this doesn’t really give you much of an understanding as to how everything works as a whole. The last thing you want is to have a positive bank balance today, only to discover in a month or two that your business model isn’t sustainable in the long run.
Management accounts are a source of invaluable information for business owners. Whether you’re a sole trader, company director or run any other form of organisation, you need to be able to see how your income and expenditure balances out. This pinpoint accuracy enables you to budget more effectively, plan for unexpected slumps in trade, forecast for the future, and grow your business in a controlled and confident manner.
Additional benefits of management accounts
We really can’t recommend management accounts enough, as they’re a simple yet highly practical way to stay on top of your finances and the way in which your business operates. Here are a few other ways that they will benefit you from day one:
Fully understand your strengths and weaknesses, such as which services bring the greatest profit and which outgoings have the biggest impact on your margins
Use this information to make changes that are designed to improve your monthly cash flow
Make key business decisions more easily and formulate new strategies with precision
Keep track of your sales pipeline to full effect
Never forget about annual outgoings that may reduce your bank balance in the coming months, such as software subscriptions and networking memberships
Explore ways to cut costs, invest wisely and set ambitious new targets
If HMRC ever decides to carry out an audit of your business, TreyBridge Accountants can oversee this for you, using your management accounts to make the process faster and smoother
Outsource your management accounts
To find out more about our flexible and affordable management accounts service, call our Yorkshire office on 01482 235575, our London office on 0207 885 0605, or fill in the contact form below.
Tagged as: Accountancy Tips & Advice
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