You might have heard people talk about management accounts and always wondered what these were about. In short, management accounts are a periodic (quarterly, monthly, weekly) set of accounts prepared specifically for the management of a company that can enable the executives to make short term decisions. These decisions are subsequently based on hard facts and numbers rather than on hunches and gut feelings.
Why your company needs management accounts
“I prepare my accounts once a year. Why would I need quarterly or even monthly management accounts? Aren’t they just a waste of time and a way for accountants to make money?”
Well, it’s a good thing you’re asking these questions. Did you know that management accounts can help you achieve some (if not all) of the following:
- Better control over cash flow
- Compare forecasts to actual results regularly
- Change strategy immediately when things are not going according to plan
- Get credit from suppliers
- Improve your chances to get loans from banks
As you can see, management accounts not only give you a snapshot of the financial state of your company on a regular basis (and not just once a year), they also help with decision making and planning. Generally speaking, management accounts help you to run your company better and more efficiently. They provide key accounting and statistical information to the company’s executives.
What is included in management accounts
A good set of management accounts always contains
- a balance sheet for the period
- a profit and loss statement
- a cash flow forecast
- an income statement
Depending on the nature and size of the company any of the following can also be included:
- a detailed aged debtors list
- Capex (any capital spending and large investments)
- a list of KPIs (key performance indicators) such as sales per head, overhead costs per head, breakeven turnover, etc.
- headcount (number of employees in each department showing staffing fluctuations)
Our role as your accountant
Here at Alba, we not only prepare your management accounts to the exact specification you require, we can also help and advise with decision making based on your accounts. We can act as your finance department in that respect.
If you would like to find out how management accounts can benefit your business in particular why not get in touch? You can reach us via email admin@alba.uk.com or via phone 01509 853779 or leave us a message on the Contact Page.
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