As a business owner, if you want to make effective decisions you need to have the most up-to-date financial information.
The preparation of accurate and timely management accounts, supported by business intelligence created by the latest digital accounting systems, is an essential part of running a modern successful business.
With the current period of challenge and uncertainty over costs, trading and profitability, there has never been a more crucial time for business owners and their management team to keep on top of their performance.
Key performance indicators
An important part of gathering management information is establishing and monitoring key performance indicators (KPIs).
These enable you to benchmark your performance against others in your sector and your previous performance to identify areas that need to be improved to increase your cash flow, improve your profitability or enhance the value of your business.
In our experience, the highest performing businesses have developed their most relevant KPIs and regularly assess their performance against them.
Your KPIs could include some or all of the following:
- Profitability
- Wages and staffing levels
- Efficiency and wastage
- Cash flow
- Stock turn
- Liquidity ratio
Getting analytical
To get the most out of your management information, you need to understand the financial results, as well as the individual figures that are contained within them. An analytical review of these results will highlight the significant variances and emerging trends in the following:
- Sales
- Gross profit
- Overheads and costs
- Operating profit
- Debtors
- Creditors
Time to innovate
Gathering data as a business has become easier thanks to the advent of increasingly powerful accounting systems that use the cloud and automation to gather the latest data.
In the right hands, and with the advice of your accountant as your trusted business adviser, these systems can empower your business to learn incredible things and achieve proactive business strategies.
If you want to take your business to the next level, it’s vital to review your entire finance function with experts who have the knowledge to provide incredible insights and recommendations that improve your systems, processes and ultimately your business profitability.
Many of our clients are already turning to our outsourced finance director and management information service to enable them to access this powerful information in a timely and cost-effective way.
Management information checklist
Step 1
Make sure all your financial information is up to date and recorded correctly in your accounting system.
Step 2
Reconcile and cross check your key accounting ledgers for accuracy and to allow you to resolve any discrepancies.
Step 3
Review the cut-off and timing differences in your accounts for items that affect your profit and loss and balance sheet.
Step 4
Analyse your management information for variances, fluctuations and unexpected items.
Step 5
Review your KPIs to highlight what action is needed to change the numbers and improve profitability.
Step 6
Last and most importantly, we work with you to understand what these numbers mean and help you identify what areas you need to improve and what actions you need to take.
