The importance of management reports
Most business owners see their year end accounts as an inconvenience, simply a method of calculating a tax liability… Is that really so?
Yes primarily your accounts are a compliance requirement as are VAT returns but your accounts can serve as vital information to help you, the business owner, grow and direct your own business if used at the right time and read correctly.
If your accounts are kept up to date each month you will always know exactly how your business is performing. Without this sort of information how can you improve and make positive changes to the businesses? How can you offer a valued member of staff a potential pay rise or move into larger premises or purchase the new equipment you have your eye on, if you don’t know how profitable your business is and what any potential tax liabilities are likely to be in the near future?
An accountant or bookkeeper are able to provide monthly or quarterly reports showing you exactly how much profit your business is (or isn’t) making, and what your business currently ‘looks like’ which will help you to make key business decisions.
Reports showing how much your clients owe you and what you owe others are a must have each month for any business that wishes to stay on top of its credit control. Depending on the business you run you can ask your accountant or bookkeeper to tailor reports that suit your company needs to show a breakdown of different types of sales, work in progress, staff sector breakdown, cash flow statements, business plans & projections etc.
These reports are also ideal for companies looking to seek finance, investors or for those looking to sell their business.
Thoroughly reviewing your management reports can highlight areas where sometimes simple changes can cut back on costs and increase profitability.
There is little point in running around in a hamster wheel and getting nowhere and quite often business owners have a look of disappointment when they find out from there accountant that actually they haven’t made as much profit as the expected and the only cash held in the bank will be paying their tax bill.
If you want a business to succeed, to grow and to prosper, maybe it is time to start reviewing what you do now and how you can move forward using management reports and a simple focused business plan.