After seeing the shock on clients’ faces when they are told of their company and personal tax liability from their year end accounts, or issues with internal costing resulting in low profits, monthly, or at least quarterly, management accounts are vital to ensure that business owners are fully aware of the current position of the investment of their time, money and effort.
What are Management Accounts?
Management accounts are prepared in a similar way to year end accounts but are for part of the year.
Provisions can be made by performing tax calculations and pro-rating tax liabilities; cash flow can be reviewed to ensure all liabilities can be paid.
Company profitability can be reviewed and decisions made if sectors of the business are under performing.
Who can use Management Accounts?
Management accounts can be used by the owners and managers of the business for decision making.
Providers of finance also review management accounts to consider current or future lending.
Customers or suppliers may also request management accounts, this may help win a new client or secure more favorable credit terms.
How often should Management Accounts be prepared?
Management accounts can be prepared for any period of time.
It is good practice to at least prepare management accounts quarterly in line with the business accounting year.
Can any business prepare Management Accounts?
All type of business – Sole Traders, Partnerships, LLP’s, Limited Companies and PLCs should all prepare management accounts so they are up to date with the financial position of their business.
If you need assistance in preparing management accounts, or just don’t know where to start, call Alistair Ferris FCCA.
Direct Tel: 0116 242 3420
Mobile: 07515 330 332