Management accounts for forward planning
Companies are required by UK law to produce annual financial statements from which HMRC tax liabilities are calculated and which Companies House files as a matter of record.
Management accounts, on the other hand, are not for public or external scrutiny. They are the means by which a business owner or directors make strategic decisions about future operations.
Management accounting information is forward looking, not backward. It is important that management information is accurate and is regularly prepared and reviewed. Management accounts will show you trends in your business operations at an early stage to enable you to take action.
Reasons for management accounts
Their purpose is to state how much profit your business is making. We can analyse costs by different operations, for example, IT or marketing… and categories, for example, by product/service lines sold or by project types. The balance sheet shows the assets and liabilities of the business and represents the state of the business at a given point in time.
This gives you a clear picture of financial stability, or where a storm is brewing. We explain the situation in clear, unambiguous language so that you can grab opportunities or take evasive action in time.
What we do for you
We support our clients by setting up systems to record daily transactions, sales and purchases and compile monthly reports. These reports, for example can compare income and expenditure over similar previous periods — this quarter compared to last quarter, or this year-to-date with last year-to-date. We can also compare actual results with budgets or expectations.
The information generates a number of reports: cost analysis, sales performance and sales forecasting, profit ratios, among others. Reports can be created specifically for your business, depending upon what information is most important for you to know.
Depending on the company or partnership, and the complexity of operation, we would suggest either monthly or quarterly reporting.