Management accounts are a set of summarised accounting data prepared and presented usually weekly, fortnightly monthly or quarterly to help the firm’s management.
There are a number of benefits to producing management account whether these are monthly or quarterly management accounts. Some key benefits are as follows.
- Declare dividends: Help directors declare dividends: dividends can only be taken from distributable reserves hence a set of management accounts can help ensure any dividends taken are within the remit of the law.
- Control costs: Significant savings can be identified by analyzing costs on a monthly or quarterly basis, which may not be identified in a timely fashion if accounts are simply produced at the end of the year.
- Can be sent to banks: If you are looking to obtain finance it is often useful to use up to date accounts especially if there has been recent growth in the business. This can show the bank you have means to repay any debt you may thinking of incurring.
- Can help obtain credit from suppliers: If you have had a surge in income and need to obtain further supplies for growth management accounts can be sent to suppliers to obtain credit.
- Help motivate staff: management accounts can be shared with key members of staff to help motivate them and plan for tax efficient share remuneration.
The objective of management accounts is to provide timely and key financial and statistical information required by managers to make short-term decisions.
For more detailed information and to arrange a free consultation, please contact us.