Obviously compliance is essential in any company. This entails ensuring your year end is completed on a timely basis and that your revenue and companies office filings are monitored and filed on time. It also is important that these matters are completed as soon as the year end has passed in order that your new year commences on the right basis and that any decisions needed around the year end are taken and acted on. Part of this is ensuring that your prime records and systems are in agreement with the agreed financials.
Management information is crucial for your business for various reasons:
- Monitoring performance
- Assessing risk and minimizing same
- Making key decisions especially around investment in the business
- Having external oversight on a micro and macro level and feedback on same
We take a keen interest in our clients business and where we are involved in the preparation of management accounts we prepare an overview of our findings for the period under review. We currently do this for a number of clients and this value added service is becoming more popular with businesses.
Also, if the management information is accurate and up to date it makes the compliance piece much easier to turn around, and usually with no surprises.
The management information that is crucial for your business is as follows:
Income – proper analysis across sales type. Review of sales trends, customer analysis etc.
Costings – proper analysis of your costings particularly your direct costs so that margins can be properly ascertained is essential.
Overheads – review and commentary on this is needed. Again oversight on main overheads and any views on action to be taken either on how overhead is allocated, how it is costed and any action to be taken. Action may include reviewing current suppliers for cost competitiveness
Balance Sheet and cash flow – sometimes the prime focus in reviewing management information on a regular basis is the Profit and loss performance. It is vital to review the balance sheet and cash flow of the business. This is to ensure that all month end reconciliations are performed and there are no cut off issues that would cause the P&L to be incorrect. It also assists in getting a view on cash position and how this may change in the coming months.
• Cash flow model – for some of our clients we include a cash flow projection. This is based on agreed assumptions and the actuals are fed in each month end to see the impact going forward.
WHY IS MANAGEMENT INFORMATION SO IMPORTANT
Put in very simple terms, if you see something not right in your current month you can investigate and put it right. Otherwise time could pass and the business could lose margin and profits. On the other hand if something is going right, you can recognise and maintain or even replicate.
If you prepare budgets, the performance can be measured against this and you can assess if any key future assumptions are to change and implement this to see the future profit and cash flow impact.
Overall more and more clients are looking for this type of information, but without the cost of employing a full-time financial controller. Over time this may be essential but in the meantime this is a service that BLACKTHORN CAPITAL can offer.