Do you need Management Accounts?
If you run a simple business where: revenue and costs are consistent throughout the year compared to previous years; and you can judge the profitability of the business, then it is unlikely you need Interim Management Accounts. However;
- If business overheads are difficult to keep track
- Or the business is going through a period of rapid expansion.
- Or specific areas of the business need monitoring.
- Then periodic reviews can be carried out during the year if required.
In a “nutshell”, Management Accounts will allow you to stay in control of your business. Merely checking the bank balance from time-to-time, does not qualify as good financial control.
A more robust review of your current financial position needs to be carried out and the following are just some of the key areas we cover and important questions we can help answer, during the process of preparing Management Accounts.
- Budget – a prerequisite for controlling your sales and costs. Without one, a true reflection of your financial position is difficult to ascertain. For example, are your profits on target to meet an anticipated expansion of the business, one year from now.
- Cash Flow – even the most successful business can fail (and they do regularly) if you are unable to pay your Creditors on time. Creating a Cash flow Forecast in tandem with your budget, ensures your business is liquid and able to meet future costs.
- Profit & Loss – detailed account of your sales and costs, compared against your budget. On the back of this, Revised Profit Forecasts can also be prepared, confirming if you are on track to meet your business goals.
- Balance Sheet – Most small businesses look at the Profit & Loss statement regularly, but many don’t understand the importance of the balance sheet. A Balance Sheet can provide warning signs so you can solve any problems before they have a detrimental impact on your business.
- Stock and profit margins – for many small businesses, much of their profit can be tied up in their stock. This can be dangerous, since, what proportion of the stock is old and, therefore, needs to be devalued or written off? If so, this could have a significant impact on your bottom line and jeopardise the profitability of your business. Also, are you product margins where they should be or are the margins on your best selling products lower than expected?
- Analysis of sales and costs – carried out in conjunction with your stock profit margins to confirm if your overall gross profit margins are on track.
- Previous year/period/budget comparisons – Are your sales up on previous years/periods but have costs increased further? Was this anticipated in the budget?
- Debtors and Creditors – are there any bad debts you are unaware off?. Can supplier payment terms be improved? Are your Creditors running dangerously high?
- Tax planning and strategies –
- Detection of fraud – Unfortunately, a common occurrence. Are your profit margins down, indicating possible stock shortfalls? Is a supplier Invoice outstanding, you thought was already paid?
Why not contact us today?For more information on the above, please Contact Us or telephone on 020 8518 8885 and we will be glad to answer all of your questions.
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