Why are monthly management accounts so important?
Management accounts can really benefit you and your business. Being aware of how your business performs on a month by month basis, allows you to:
- Reduce your tax liability – monthly account management makes you aware of your estimated pre-tax profit before your Year End enabling you to make capital purchases or pay pension contributions etc., which will overall reduce your Corporation Tax liability.
- Increase your profitability by increasing sales volume/price – Monitoring sales and different products you sell generate different profit margins. It allows you to assess customer demand and adjust your prices accordingly. If your gross profit is falling or increasing it allows you to act swiftly to maximise profits.
- Increase profits by reducing costs – Monthly management account reports allow you the opportunity to review the trends in your overhead costs and the money you pay your creditors.
- Carry on trading, control cash flow – Businesses can fail if they run out of cash due to poor cash flow control. It’s imperative to understand the cash cycle of your business months in advance and be prepared for different eventualities.
Monthly or Quarterly management accounts provide up to date, meaningful information giving you the knowledge to increase turnover, reduce costs and minimise tax liabilities.