Important as it is, no one does bookkeeping for the sake of bookkeeping.
Your business needs bookkeeping because it produces financial and management information that measures business performance.
As accounting professionals, we work with clients to develop financial strategy, offer business consultancy advice, keep on top of the latest tax regulations and last but not least, review your accounts to help you save money, improve revenue and grow your business.
Using Management Information is a sure way to measure and improve business performance.
What is management information and how is it useful?
The top two issues for accounting management information are:
Information that helps you measure and improve profitability includes:
- Profit & loss report – by month, vs last year, vs budget
- Profit by project, by customer
- Profit margins by product / service
- Sales by customer
Information that helps you measure and improve cashflow includes:
- Cashflow model
- Aged debtors – a list of who owes you money
- Aged creditors – a list of who you owe money to
- Balance sheet
You can get all this information from up to date, accurate bookkeeping using decent accounting software.
What if I don’t understand Management Information?
On one hand, accountants cloak this stuff in jargon, on the other hand, you won’t have a successful business if you don’t find a way to understand and improve how it’s performing.
Good bookkeeping using good accounting software can produce the information you need, but you must invest some time and effort in understanding what it means.
Talk to other business owners, people in networking groups, your accountant and ask yourself What information do I need from my accounts to understand how to shape and grow my business?
Talk to us!
One MD we know can’t work with numbers so we converted his management reports into graphs which he was more than happy with.
Whatever it takes – find a way to understand your numbers.
Take action – now
Management information is telling you things about how your business is performing. But unless that leads to meaningful change it’s a bit pointless. As Einstein may have said:
“The definition of insanity is doing the same thing over and over again, but expecting different results.”
Some business owners find this easy and some find it difficult. Some make changes that don’t work before they find the right answers.
You don’t have to change everything all in one go. Test things:
- Change prices for a range of customers
- Change prices for a range of products and services
- Invest in some training for your team
- Re-invent workflows for a short period
If you want different results you have to try different approaches.
Good management information will help you measure the success or otherwise of your decisions.
How can Blue Dot Consulting help?
We help businesses with:
- The building blocks – bookkeeping, workflows, software
- Generating useful management information and ensuring it reaches the right people
- Explaining what the information means and how you can use it
- Taking action to improve business performance
Call us for a free first meeting to look at the management information in your business and how it can help you to improve profitability and cashflow.
Based at Putney Bridge, we work with businesses throughout central and South West London. Why not give us a call? 020 8166 5960 or 020 7125 0270.