Management information and why it will continue to be a key business tool
Management information covers a host of different reports and documents which can vary depending on your business activities. I believe that, at the very least, they should comprise of a profit and loss account and a cashflow review. Ideally, they should include a balance sheet and a detailed review of aged debtors and creditor balances, as well as a review of performance v budget. Following on from the information produced, businesses should then look to update a rolling cashflow forecast.
We are currently working with many businesses to produce 12-week cashflow forecasts. These are reviewed against management information so that business owners can ensure that they are on top of their cashflow during these uncertain times. We are now over 12 months on from the initial lock down with most businesses back up and running (if indeed they did close). One thing almost all businesses have in common is a squeeze on working capital brought about by the challenges that we all face. This is being caused by customers wanting longer to pay and suppliers wanting to be paid quicker!
The best way to manage this is to have all relevant information to hand on a timely basis. If you have all the cash facts to hand – who do I owe, who owes me, what orders do I have in, when will they be paid, how much cash is available now etc, you make much better decisions. Cashflow information is key for business owners as it reflects the here, now and immediate future.
Cashflow forecasts can also identify where you are going to run out of cash. If you cannot move payment dates around, you may need to look for short term funding from your bank. Any lender will require historic management information, as well as projected outturns to determine the level of finance available to you. Having regular management information gives banks and other lenders confidence that you are in control of your business and finances. A lack of management information can make a business look unprofessional or a potentially risky investment.
So how do we speed up creating this management information? For micro and smaller businesses, this can be accomplished very easily by using cloud accounting software. The software is accessible anywhere, anytime and by anyone that you give access to. This means that you can work seamlessly with your accountant to get up to date information. The management reports built into the software can be combined and converted into professional reports, and all this can be done with just a few clicks of your mouse. Getting data into the software can be digitalised to enhance the process even further, speeding up the bookkeeping process.
For businesses using desktop accounting software such as Sage 50c, are you aware that you can now import supplier invoices and expenses into your system without having to type anything? This will allow you to go paperless. It is also a great way to speed up the preparation of your management information. It will give you more time to review the management information and therefore make more timely decisions. We can also write management reports for businesses, extracting data from Sage 50c so that you can quickly report on the key areas. We can even create dashboards, making it simple for you to instantly pull-out key information as and when required.
To find out more about what management information you should be preparing, how you can prepare it and the costs involved please speak to your contact at MHA Moore and Smalley or contact the Digital Solutions team – email@example.com