Lets be clear here – I am not suggesting that we are ever going to make a hit movie based on using a set of business accounts. However, if you are interested in growing your business there will be information in those figures that will help you do that, or that will let you see any challenges that are coming up.

This article has been inspired by the fact that I have had three small businesses speak to me about how management accounts could help them, and each one has told me how the nuggets of information would be really valuable.

So firstly, lets make a distinction:

Your statutory accounts are something you have to complete (or get your accountant to complete), which are used for the public record – for producing statistics! For larger companies, investors may use them for deciding whether to buy shares. BUT they are historic and bland!

Accounts don't need to be boring!

Your management accounts are optional, you decide whether to do them, how often to do them, and what is in them. They can be as simple, or as complicated as you want, they may even include non-financial information. The clue is in their title – they are used for management.

They will only have real value to your business if you use them, so make sure they can do what they want for you. For example, do you have an area for concern at the moment …..

…… a restaurant is worried that it doesn’t seem as profitable as it used to be. It sets up management accounts to look specifically at the margins it makes on meals.

…… an event management company finds that it seems to be busy, but shows no profit. It sets up management accounts to make sure that the timing of the revenue and costs match the timing of events.

….. a manufacturing company is short of cash in the bank, it sets up management accounts to monitor how long it takes customers to pay.

There are certain standard bits of info that you should have in your management accounts (a bit like checking how much petrol is in the car before making a journey, the speedometer etc..), but my advice is that

If you want any chance of making your accounts interesting and relevant, and if you want to use the financial data to help your business thrive and not just survive, then look to what information you want to know that could make a difference.

PS If you are unlucky enough to come across this site at the moment, this is just after I have installed and started to play with WordPress. Please ignore it for now, but come back soon

OK, welcome to Understanding Accounts! I can’t imagine anyone has arrived at this site for a bit of light reading! Either you have seen a comment I have made and decided to find out more, or you have been searching for the answer to an accounting query and found yourself here.

So what is Understanding Accounts, well it is the blog site of Graham Smith Business Services. We have been providing business owners with really valuable information based on their accounting data for almost ten years. Having great data to hand means that better decisions are made.

So, the aim of this site is to provide a blog filled with useful hints and tips which you can use in your business. Over time this will build into quite a library we hope.

Even better, we will complement this with a glossary of all those irritating accounting terms that come along and test your patience.

Any suggestions for topics or queries, then please do get in touch