The importance of regular and up to date management accounts can not be emphasised enough. A business can often be engrossed in day to day trading and miss the bigger picture.
Year end accounts can be filed up to 9 months after the end of an accounting year and so often these numbers are out of date and of little or no use to the owners of a business.
Monthly (or quarterly for smaller entities) management accounts are a great way to keep on top of the figures. They will identify the areas of the business making money and those not!
There is no set format for these internal figures and so we will tailer them to your business and focus on the key areas that matter;
For example a freight haulage company will want to keep abreast of its profitable territories and know which ones are costing it money. A retail business will be focussed on margins and stock turnover and an estate agents will want to know its top performing sales people.
A further element to these management accounts is to consider the future and project, in particular cash flows, to identify the crunch points for a business and know the right time to approach lenders to bridge these gaps.
This can include approaching banks to arrange factoring of customer debts. There is often then an insistence by the bank that management accounts be prepared.
We look to work closely and regularly with our clients and as such management accounts are a key part of the work we do and it is what sets us apart from regular ‘year end’ accountants.
You may have heard that HMRC will soon be stipulating that all businesses must file tax information digitally. This will begin first with full digital VAT submissions.
If you currently prepare manual or spreadsheet records you will need to make the switch to an accounts software package. The options are numerous and we have particularly good breadth of knowledge to advise.
Traditional desktop software package such as Sage 50 or Quickbooks will be updated and ready to make these submissions or this can be used as an opportunity to begin using a cloud accounting package such as Xero, Quickbooks online, Iris Kashflow or Sage One.
Contact us to talk through the options and let us help identify the best one for your business.
So I started this article mostly to slip a bird reference in but there is a serious point here too, PROFIT!
There is no sense in being in business unless profit is your goal.
In the early days of a business, perhaps the first year or two, a loss in not unreasonable. However you will want to keep track of key indicators such as your gross profit margin to know that your trading activity is contributing to your fixed costs.
We will hold regular meetings and review these key indicators with you to keep you on the right track towards soaring PROFITS!
We are Xero certified advisors!
With specialist knowledge in implementing cloud accounting we can help set up your business for the future and introduce the many time saving and improved financial reporting tools available.
It won’t be too long before the entire bookkeeping function can be automated. For now we can show you how to link bank accounts to bookkeeping packages to remove the need to type out details; use invoice reading software to save time; store all data in the cloud and go completely paperless!
Contact us us to talk about your cloud accounting needs.