Why Business Owners Should Produce Management Accounts

As a business owner, it’s important to regularly track and assess your company’s financial performance. One way to do this is by producing a set of management accounts.

Management accounts are a set of financial statements that provide detailed information about the financial performance of a business. They go beyond just the profit and loss statement and balance sheet, which are typically prepared for tax and regulatory purposes, and provide a more in-depth look at the company’s financial health.

There are several reasons why business owners should produce management accounts. First and foremost, they can help you understand your profit and financial performance. By tracking and analysing key financial metrics, such as revenue, expenses, and profits, you can get a better understanding of how your business is performing and where you can make improvements.

Management accounts can also help you identify trends and patterns in your financial performance. By regularly reviewing your management accounts, you can spot trends and changes in your business that may not be immediately apparent from just looking at your profit and loss statement. This can help you make informed business decisions and adjust your business strategy as needed.

In addition, management accounts can be used to set and track financial goals. By setting specific financial targets, such as increasing profits or reducing expenses, you can use your management accounts to measure your progress towards these goals. This can help you stay on track and make sure you are meeting the financial expectations you have set for your business.

Finally, management accounts can be used to communicate financial performance to stakeholders, such as investors, employees, and lenders. By regularly producing management accounts, you can provide transparent and accurate financial information to these parties, which can help build trust and confidence in your business.

Part of being good at accounts is the ability to be able to backup, substantiate, verify or validate all your figures, so to have something that’s very clear and easy for you and an accountant to decipher is really important.

If you are looking for affordable management accounts training. Take a look at our Management Accounts Excel Schedules training package. The training package shows you what schedules you should prepare at your period-end or year-end, either for you or your accountant, but also provides you with seven plug-and-play template Excel files to use straight away. We teach you how to prepare the schedules and reconcile them against Sage 50 Accounts and what reports to run to check they agree. Find out more here.

If you are using Sage 50 Accounts and would benefit from some support, our Sage Lady Academy membership provides affordable training, support, and mentoring on all matters relating to Sage 50 Accounts, bookkeeping and accounting principles via training, masterclasses and our weekly Sage Live Q&A. 

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24.01.2023

“Any advice relating to accounts or tax should be sought from your tax accountant. Sage Accounts Solutions Limited will not be held responsible for any loss or damage caused as a result of the information contained herein.”

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