Every limited company has to submit a set of accounts to Companies House each year, providing the perfect opportunity to take a step back and see how your business is doing – recognising any trends in income, any tricky periods and what can be done to improve things in the future.
This is obviously a great thing to do, everyone should keep an eye on their business and take a longer-term overview. However, given the benefits this can bring, it is a process which can be even more beneficial if carried out more regularly.
Monthly management accounts
A monthly management account lets you see what is going on in your business at this moment in time. It can make you aware of successes and dangers more quickly, so you are better positioned to act on them and make the most of the situation.
Monthly management accounts can be even more valuable if you are looking to expand, as you will be expected to plan ahead based on real-life facts and figures.
You can make your accounts as detailed or as broad as you feel you need – your finance team and accountants will be able to advise you which figures will be most valuable. At the very least, they will provide an overview of the incomings and outgoings of your business, your balance and your cashflow. This will give you the basic information you need to keep your business on track.
What information will a monthly management account give you?
While it may sound like just another admin task to add to your list, a monthly management account is worth the small amount of time it will take.
Getting in the habit of reviewing your monthly management account keeps you up to date with what is happening in your business – you will be able to see quickly where money is being spent and make changes if necessary. Waiting until you receive your annual accounts may mean it is too late to make changes that will have a significant impact.
You will also have a better idea of your cashflow, so you are fully aware of any large payments on the horizon.
Using monthly management accounts to plan for growth
Knowing the financial status of your company is the first step towards making moves towards growth. With monthly management accounts, you have facts and figures to present to potential funders, proof that expansion is viable and evidence that your cashflow is sufficient to support your expansion plans.
Monthly management accounts can be a useful tool in monitoring any new activity too. Comparing your budget and your forecast can let you know if you have anticipated demand well, if you have over or underestimated, and what changes may be necessary.
Ultimately, monthly management accounts give you more control over your business. Being armed with the right information at the right time allows you to make the most informed decisions and capitalise on the positives while rectifying the negatives.
To speak to one of our team about setting up and using monthly management accounts, and how they can help you in the short and long-term, simply email firstname.lastname@example.org, book an appointment online or call us on 01249 691360 to arrange a free consultation.