Most of small medium business operator take for granted on their accounts, especially on initial part of expenses when they started their business.
It's important that the accounts are accurate and up to date, and that they are backed up with detailed records, such as receipts, invoices and purchase orders, payments in and out, etc.
Management accounts can help you make timely and meaningful management decisions about your business.
Different businesses will have different management accounting needs, depending on the business areas that are important to them. These can include:
- the sales process - such as pricing, distribution and debtors
- the purchasing process - such as stock records and creditors
- a fixed asset register - details of all fixed assets, including identification numbers, cost and date of purchase, etc
- employee records
There is no legal requirement to prepare management accounts, but it is hard to run a business effectively without them. Most companies produce them regularly - eg monthly or quarterly.