A set of a management accounts is a measure of how the company is performing and how strong the company is positioned to achieve its short and long-term goals.
These are normally produced monthly or quarterly and normally include the following:
Profit and Loss account.
Cash flow forecast; and
Analysis of Aged Debtors and Aged Creditors.
Producing or even reviewing a set of accounts can take up valuable time, however, if the correct processes and reporting structures are in place, this should provide you with a quick snapshot of the company’s performance in real time.
A few benefits of having management accounts:
Extra time for you to grow the business knowing that the finances of the company are in good hands.
Greater control of your business as you will have real-time information which can provide you with an accurate picture of the business.
Identify trends, monitor spend and provide comparisons to previous years and the annual budget/plan.
Everyone would have heard the saying “cash is king”. Cash enables you to grow the business, and with a full set of accounts, you can identify pressure points, costs savings or increased revenues, which will have a direct impact on the future cash flows of the business.
Whilst larger companies may have their own finance function for this, it is possible for SME’s and start-up companies to have this insight at a fraction of the cost.