Management Accounts

Management Accounts Service

The objective of management accounts is to provide timely and key financial and statistical information in order to make management decisions. Management accounts Daventry

Management accounts help business owners keep up to date with their day to day reports. Instead of leaving it until your accountant produces the year-end reports, if you want your business to thrive and grow, it is so important to keep an eye on how the business is performing on a monthly basis (or even more frequently if required)

Management accounting is different from financial accounting, in that it produces reports for a company’s internal stakeholders, as opposed to external stakeholders. The result of management accounting is regular periodic reports for the business owner, managers etc.

Due to the nature of management accounts being prepared for internal use, they can be prepared in a way to suit your own informational needs as opposed to statutory requirements.

This could be looking at up to date monthly Income Statements (P&L), cash flow forecasting or Key Performance Indicators (KPIs) with ratios that fit in with your own requirements.

The Income statement (P&L)

The P&L measures how well your business is performing whereas the balance sheet is a measure of the value of the business.

By regular monitoring of the P&L you can get a detailed breakdown of which areas of your revenue streams are working well for you and which are not. In the short term, a business requires cash flow to survive but in the long term a business needs to generate a healthy profit in order to boost its cash resources.

Of course the information that can be gained is only as detailed as the data that is input, so we can guide you to the most appropriate way of collating that information, or do it for you.

Cash Flow Forecasting

The balance sheet shows you how much cash you have in your bank at that point in time, but in order to ensure your business does not experience a shortage of cash, careful management of the cash flow is required. This may be on a weekly, monthly or quarterly basis dependant on the business requirements.

By careful monitoring of cash flow, any shortages can be identified in good time and arrangements made or if you are fortunate enough to have cash surpluses you may wish to benefit from the position and invest the money to grow your business further.

Key performance indicators (KPIs)

KPIs are used to measure profitability, liquidity and efficiency. These can be measured against your budget, last years figures or a competitor in a similar business segment.

Examples of KPIs that could be prepared for your business could be:

  • ROCE (Return on Capital Employed)
  • Net profit margin
  • Gross profit margin
  • Debtor days
  • Creditor days
  • Stock holding days
  • Current ratio
  • Inventory holding days
  • Fixed asset ratio………….and so on.

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