Management Accounts: What are they and why do businesses need them?

15 March 2023

It’s a great question, and one that deserves an in-depth response. We asked our Senior Client Manager Ben Roche to explain, who is a big advocate of management accounts.

All business owners are familiar with annual accounts. It’s part of the duties of running a business to produce accounts at the financial year end and use those figures to calculate how much tax to pay.  By their nature they are a reflection of what’s happened in the past, and from a point of usefulness to the day-to-day management of the business, they don’t give away very much.

Management accounts provide a greater level of detail into the profitability of the company because the preparation is more timely, they look forwards rather than backwards, and offer a closer view of the finances.

When we prepare the first set of management accounts for clients, we can normally find indicators for success and problem areas for businesses. We can identify strengths and weaknesses, risks and opportunities to discuss with business owners from the get-go. 

Once the first set is prepared, we have the benchmark. When future sets are prepared, we see trends and highlight anomalies which means that the business can keep on track more easily. In addition, we can run scenarios for changes including adding products, increased cost of overheads, taking on new team members or making an investment in machinery.

The information from management accounts puts business owners in the driving seat. It offers a proactive approach and enables better planning. My background is in industry, and I know how constant changes can impact businesses on a regular basis. As well as general changes, bigger developments including new products or services to a business can impact on profitability. Looking at the financial information in a more timely way means positive actions can be taken quicker.

I believe that the biggest issue for businesses is wasted time. Having financial information from management accounts means that far less time is spent on things that aren’t working. These time savings are crucial for business as they allow more focus on the things that are right, and in turn worry less.

In almost all cases the return on investment for management accounts starts from day one, which is why I recommend adding this service for any businesses looking to maximise profitability and/or reduce stress on the management team.

We offer both monthly and quarterly management accounts, as well as offering management accounts within our Business Growth Accelerator programme (LINK HERE)

In addition to regular management accounts, we can also prepare ad hoc management accounts for funding providers who often require them when borrowing money, or for the sale or buy out of a business.

Maple Accountancy is a firm of expert Business Advisors offering accountancy services, tax and business advice to owner-managed and family-owned businesses.

All clients are individual, and we tailor our service to your needs. Use the site to find out what makes us different and understand why you should appoint us.

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Maple Accountancy Ltd.

Carter House, Wyvern Court, ​Stanier Way, ​Wyvern Business Park, Derby. DE21 6BF

01332 207336
success@maple.uk.com

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