How do you know how well your business is doing? You get your monthly profit and loss account from your accountant? Or maybe a quarterly report from your finance department? Maybe you spit out a few reports from your accounting package like Sage or Xero and think that's it. There's some sales information at the top, some costs going somewhere and then a bottom line which is hopefully a positive number. If that's the case, you're satisfied, right? But how do you know how your business is actually performing? How do you know where to focus your efforts for the next week, month, year? That's why having timely and accurate management reports are vitally important for any business growth.
Life moves fast and it seems to move even faster in the world of business. Trying to get on top of data and information in such a fast paced world, despite having most of the answers at the press of a few buttons, seems difficult. At JB Business Solutions, we take away that hassle by producing reports in a timely manner that allows business leaders to make decisions that deliver actionable impact and real growth. Some people will like a 60 page thesis detailing every transaction and some will prefer 2 pages with a brief summary. Some people like graphs and charts and some are more interested in the core numbers.
Whatever works but the key is to understand the information in a way that allows for action.
Most business leaders are likely to know what their sales levels are like and whether the bank balance is looking pretty or not. What they may not know and what good management accounts can do for you is tell you:
are your key customer accounts making you any money or not
what are your gross margin percentages per sales line - do any of these need improving or do you need to make adjustments to your product mix
how are your overheads - where are you spending all your money
what is your cashflow forecast for the next 8 weeks - 6 months - any potential banana skins coming your way
P/L comparisons to prior year / budget - is your business growing as you would like or any corrective action required to get back to budget
How are your debtors and creditors looking - who owes you money and who do you owe money to
All of the above is a snippet of what can be produced and when completed in a methodical and efficient manner at the close of each period end, can offer real value to business leaders to make informed decisions. For example, a business may choose to focus on selling more of one line to a particular customer because more sales is good, right? Well not necessarily if a, the customer is a loss making account and b, the margin made on that particular product is not as healthy as a different product. Another company had strong sales but couldn't understand why their cashflow was always so tight but they never looked at their Aged Debtors to chase outstanding monies owed to them. Having this information provided at each period end would have given more cash in the bank which is what most people get into business for.
One of the associated challenges with a lot of good management reports is the assumed cost and time from FD level resource or you end up with poor quality information which defeats the purpose of production. This doesn't necessarily have to be true.
There are many benefits to every business of quality management accounts produced in a timely and accurate manner and if you feel this is something that would help your business be a success, speak to us today to find out how we can help.
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