Whatever market you may be in, running a business can be challenging. Whether it’s working towards growth, increasing profits or finding a place within a very competitive space, there are many aspects to consider. Therefore, any tools that can help you to boost your business are going to be valuable. The creation of management accounts is one such tool that can be useful for any company, large and small. These accounts collate data and can provide a unique insight into the business and its potential future.
With this in mind, what actually are management accounts and what benefits do they offer?
What are Management Accounts
As the name suggests, management accounts include a set of financial reports, typically utilised by business owners and management. The majority of accounts are typically produced either monthly or quarterly. There is no set outline for what your management accounts should include but they often incorporate a profit and loss statement, cash flow statement and balance sheet. This data helps to provide a snapshot of your business and its current financial state. This information can help to provide a rough gauge of how healthy the business is and an insight into the future.
Surprisingly, many companies do not produce management accounts, unless they’re needed for something specific, such as investment or taxation. Whilst extremely small businesses may not see much use out of these accounts, practically every other type of company can gain a valuable insight.
What are the specific benefits of management accounts?
Growth
For the majority of business owners, continual growth is one of the main goals. However, it can be difficult to measure growth without some sort of data to refer to. This is where management accounts can prove to be invaluable. Depending on the type of information that you collect, you can identify where and how the business is succeeding and use this as a model to boost growth overall. Conversely, information on losses or poor sales will allow you to cut any underperforming products or services, before they become damaging.
Whatever aspect of growth that you may be focused on, whether it be financial, customer or overall brand awareness- management accounts can help.
Finances
Data provided from balance sheets and cash flow, allow you to gain a comprehensive view of the businesses overall financial health. Simply put, keeping track of the money you have coming into the business and leaving the business, allows you to not only gauge how well the company is performing but also plan for the future. It can be easy to feel overwhelmed when running a business, especially if you’re dealing with complex finances. Management accounts and the insight that they provide can help to simplify the overall process, protecting you from potentially costly mistakes.
Decision Making
An important part of running a successful business is making the right decisions, at the right time. This can be a heavy burden for those in charge but with the right information at hand, you’re more likely to make the right decision. Other than relying on gut instincts, decisions should be informed by data. However, with so much information available, it can be easy to feel out of your depth and this is where management accounts can really make the difference. They can condense large data sets in to smaller, easy to digest forms, allowing for simpler analysis. Whether it’s customer behaviour, sales, profits or losses, information that is both accessible and insightful can offer a wealth of benefits in the decision making process.
Obviously, management accounts can be created in-house, either by the management themselves or by a designated employee. However, many businesses are looking to outsource this task, allowing for all the benefits of accounts, without having to invest time and effort. The experts at Fund Flow can provide monthly or quarterly reviews of your accounts, offering real-time insights into the business. For further information on this service, don’t hesitate to get in touch with Fund Flow directly.
