Management Accounts

Management Accounts Overview

Have you been wondering lately what exactly Management Accounts are? Additionally, beyond the basics of how they work and what they are, why are they important? First and foremost, it is important to note that small businesses accounting and bookkeeping is an essential function and one that can’t be avoided. It is a job that needs to be performed to keep your business in line with legal requirements. Generally speaking, this job is often outsourced due to the time constraints and legislative complexity that comes with it. However, not all accounting services are aimed specifically at tackling the legal side of your financial department.

Our accounting services include management accounts. These services are rather aimed at gaining a better understanding of your businesses financial trading position. All in all, management accounts are sets of financial records that are prepared over various periods. They are designed to give you insight into your true financial performance. 

Grow Your Business Using Management Accounts

When your aim is to expand, it is important to keep your finger on the financial pulse of your business. This entails more than the occasional glimpse at your business bank account. You need to monitor your businesses money and measure performances throughout the year. Checking your bank balance is similar to looking at a snapshot in time of your business. Ongoing tabs should be kept on your financial records in order to accurately establish the trends in your business. This is where management accounts come in. 

Management accounts will provide you with all the information you need for planning growth, diversification, or expansion. Essentially, they will give you the backing you need when implementing new ideas, or give you an indication of ideas that aren’t working out. Additionally, you will be able to make informed business decisions and this could make all the difference in the success of your company. 

A Closer Look at The Information

Now, management accounts contain a host of various information that is compiled and interpreted in a way that provides valuable insight into your business. They typically include profit and loss, balance sheet, cash positions and business Key Performance Indicators (KPI) information. Your KPI’s are a set of measurable goals that your business wants to achieve within a certain amount of time. These goals can include both financial goals, as well as performance goals. Examining your KPI’s against the financial statements can give you a good indication of whether or not you are meeting them.

Furthermore, analysing your cash position and profit and loss statement will allow you to notice trends in your business. This will also indicate to you where your areas of improvement are. On the other hand, your balance sheet will also provide you with an overview of your net worth, showcasing your assets, liabilities and owner’s equities. This will help you answer important questions such; how well do you manage debt? Or, how quickly does your business turn assets into revenue?

Management Accounts vs Statutory Accounts

You might be wondering what the differences are between management accounts and your statutory accounts. Overall, both accounts use data from your income statement, cash flow statement and balance. However, the way this information is used is different. Statutory accounts follow a typical format which has to check certain compulsory boxes. They can be perceived as being more for stakeholders and HMRC, whereas management accounts are for you as a business owner. It is more of a raw, detailed view of what is going on in your business.

All in all, management accounts can be extremely valuable when compiled and analyzed by the correct people. At Accounts Fortress, our expert small business accountants can help you to make the most of our management accounts to take your business to the next level. Furthermore, we can help your business with VAT and tax returns, payroll, bookkeeping and accounting and company secretarial services. Get in touch with the leading small business accountants in London today!