The Importance of Good Financial Information

Peter Watters - Director - McPhersons Chartered Accountants & Tax Advisors

Accounting is just about the numbers, making sure a business is doing everything by the book, submitting the correct information to HMRC at the right time, keeping everything legal, right?

Wrong!

Taking this kind of stand-alone approach to your accounting function could do your business more harm than good. This is why you, with support from your accountant, need to take a holistic approach and understand how good (or bad) control of finances affects your entire business.

A business owner needs to have a good understanding of how each decision affects their bottom line.

What I’m describing here is often referred to as management accounting. Good management accounting will give you actionable information rather than the more common historical information you achieve from year end accounts.

This involves planning for the future and goes into much more detail about different aspects of the business. For example, information may be produced to identify issues that may arise in budgets or changes in production to increase productivity.

In the main part, management accounting does not focus on what has already happened. It is in the now, it is involved in the day to day running of the business to ensure every decision is right for the business financially.

It’s all very well producing the best product or service in the world, but if it’s not viable to sell it, you’re wasting your time.

Management accounts are likely to be essential if you're looking for outside finance for any expansion plans; banks and other lenders will want to know that you are able to repay any borrowing and that you have a clear financial plan.

Whilst this may sound like a daunting task it can be broken down to small components such as reconciling the bank regularly and updating sales and purchase ledgers. These small steps allow you to monitor your cash flow and plan for the months ahead as you should be able to plot your income and expenses with reasonable accuracy.

It is now easier than ever to keep on top of your finances, online bookkeeping packages such as Quickbooks Online, Sage One and Xero (to name a few) can link directly to your bank and you can even import expense details straight in using third party apps. It really has never been simpler. The added benefits include being able to work more closely with your accountant, enabling them to support you and guide you with business decisions.

Peter Watters - Director - McPhersons Chartered Accountants & Tax Advisors

Peter has many years experience working with clients of all sizes, from sole traders through to international groups. His portfolio comprises clients from many sectors including leisure and tourism, manufacturing, the motor industry as well as a number of local charities.

He has particular experience auditing owner managed businesses and well as charities and not for profit organisations.

Peter also has strong IT knowledge and assists Mark in developing and implementing the firms IT strategy as well as advising clients on their systems.

Peter is an active networker and has been the treasurer of Bexhill Chamber of Commerce and Tourism for a number of years.

Contact Peter at:

01424 422038 & 01424 730000
[email protected]