A small business’s guide to management accounting
Under company law, all businesses must prepare annual accounts, as well as annual tax returns, to file with HMRC and Companies House. Many start-ups and small businesses hire an accountant to write these reports and leave it there, but when a company begins to expand, they tend to hire a management accountant to not only generate quarterly or monthly management accounts, but also to make the accounts more meaningful for the future success of the organisation. Below is a management accounting guide for small business owners:
With management accounting, the more frequent production of reports enables managers and directors to use the up-to-date financial information to help them make better-informed business decisions and maintain effective control over corporate resources.
After the production of each report, the accountant will help clients to analyse the figures in order to work out how well, or otherwise, the company is doing. The frequency of analysis can help flag up the products and services that bring in the greatest amount of money, and those that aren’t living up to expectations, as well as help, identify and control wastage, improve cash flow and reduce expenses.
The regularity with which management accounts are generated depends on the individual company. Most will only want quarterly figures, but larger companies tend to do theirs on a monthly basis.
On the whole, a large number of companies outsource management accounting to specialist companies like HB Accountants. One of our directors, Keith Grover, explains the advantages of outsourcing your management accounting.
“On a quarterly or monthly basis, we will prepare a set of accounts, then sit down with you and discuss the findings. We’ll tell you what we think the important points arising from the analysis are, and advise on the best course of action. We are also happy to attend Board meetings.
“An additional advantage of doing the accounts on a more regular basis comes with making better tax planning decisions at the best time.
“In taking the role of a virtual accounts director, a management accountant can make a significant difference to a company’s success. ”
For more information about management accounting or to make an appointment to discuss it with one of our qualified team members, call us on 01992 444466 or email firstname.lastname@example.org.