Why do I need management accounts?
If you’re planning on expanding your business, making capital expenditure or cutting back on costs, management accounts become very important to give you insights for your decision-making.
Can’t I get this information from my annual accounts?
By the time you come to review annual accounts, you might find that costs have spiralled or that issues have arisen which it’s now too late to resolve. By producing regular management accounts, you can get a realtime snapshot of how your business is performing.
How often should they be produced?
Management accounts are usually prepared monthly or quarterly, which can really help with capital expenditure planning, profit extraction and taking advantage of capital allowances.
How can it work in practice?
Imagine a fast-growing and dynamic business which is struggling to keep control of costs and profit margins. Current processes are inadequate for the expanding company and the amount of profit made on each contract is unclear. With the help of Quickbooks or Xero cloud accounting and management accounts, this business could identify cost-saving measures, including the renegotiation of hire contracts and insurance. They could also quickly spot non-profitable business, allowing them to pick and choose more lucrative contracts.