Under the Company’s Act of 2006, Company Directors are required to maintain accounting records which are used to provide annual accounts. This means that each year, as a business owner, you will be required to ensure the authorities are provided with statutory accounts and a corporation tax return, which is normally done by the company’s accountants. There is also the requirement to submit quarterly VAT returns if registered, and monthly PAYE submissions, if you employ staff.
Whilst this information helps you to fulfil your legal responsibility as a director, it is of limited help with running your business as it isn’t timely, it is often in short form, and it doesn’t necessarily relate to what you know or understand about your business.
To have a true understanding of what is happening within your business, it is vital to have access to management information, which is the collection of data that provides key information to help drive decision-making.
Management information is tailored to focus on the metrics most crucial to your own business such as -
Profit and loss, including performance by division or department.
Sales figures, ideally broken down in a meaningful way for your business for example by site/product/customer type, etc.
Actual performance versus budgeted performance.
Cash flow forecasts.
Details of debtors and creditors, including aged reports and activities around late paying customers.
Balance sheet showing a snapshot of where the business is, detailing assets and liabilities.
Stock levels, if applicable.
At Hale Portfolio, we provide monthly management information packs for our clients to help drive decision-making, and here are 8 reasons why we recommend monthly information packs for all businesses -
Rather than waiting for the annual accounts, having monthly access to the information allows you to make timely decisions and act on any issues identified.
Without the management information there isn’t a true understanding of the situation and decisions must be made on assumptions. Our monthly reports provide the right information at the right time, enabling you to make the right decisions for your business with confidence. One of our clients assumed part of their business wasn’t profitable, but our management information revealed that it was and now they are looking to grow this area.
It helps break down your profit and loss into different areas so you can see which parts of the business are performing well and which parts may need more attention.
It helps maintain good relations with existing lenders and can help when looking to obtain further funding as lenders will need to see in-depth information when reviewing applications.
Businesses run the risk of running out of cash if there isn’t an accurate understanding of the cash flow situation. Reviewing the cash situation regularly mitigates this risk. One of our clients has a US parent and requires USD consolidated reporting for their VC investors and so we implemented Spotlight reporting to provide quick consolidated management information and regular budget updates, essential for cashflow forecasting. For more information on managing cash flow, see my article here.
It helps provides peace of mind knowing that things are under control and being dealt with.
It can give your business a competitive edge as it enables you to divert attention and resources to the areas where they are needed most.
Finally, we believe good management information helps Directors promote the success of the company, which is another of their Company’s Act responsibilities. One of our clients has been going through a period of high growth and we are currently working with them to increase their monthly reporting to include project profitability to help the business leaders set prices for future projects. Even when things are going well, it’s important to know why.
If you would like to benefit from the insight our monthly management information packs provide, please get in touch - we will be happy to help.