A Comprehensive Approach
The Importance of Management Information
It is vital to know how your business is performing throughout the financial year, using real-time information. Otherwise, how will you know whether or not performance is better or worse than expected? Worryingly, and all too often, small businesses only discover how well they have done once each year, after their annual accounts have been produced.
In lieu of regular management information, they instead rely on their bank account balance(s) as their main indicator of performance. However, this approach is fraught with danger, as well as providing an extremely limited view. This is because there are many factors that affect a company’s bank balance, which will not necessarily reflect the actual level of profitability. In addition, annual accounts are prepared to comply with Companies House statutory requirements, and therefore follow a fixed format. As a consequence, they tend to omit valuable information, plus they are usually significantly out of date when available.
Regular management accounts are an invaluable source of information for any business. They provide up-to-date management information, thus enabling the company directors and owners to track performance on an ongoing basis throughout the financial year. Accurate management information is a key component in assessing performance against targets and prior periods, thereby assisting business planning and decisions. Management accounts are usually prepared at monthly intervals, but can be supplemented by more regular reporting of key performance indicators. Whilst they usually focus on financial results, they can also contain other important business measures, such as conversion rates, business pipeline, staff headcount, etc.
How We Can Help
FD Business Solutions can assist in identifying the key metrics on which management and owners want regular visibility. These will usually be the indicators that are used to measure and improve business performance. We can then compile a suitable suite of management reports that deliver this information.