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What are Management Accounts and Do I need them?

Let’s be honest, how many of us really understand our numbers and what they are actually telling us. The reason for this is that many of us don’t even know when they need to be produced, how frequently, or what should be in them.

 

Most people know they have to have accounts produced at least once a year, to satisfy HMRC and possibly Companies House, but how many of us really see them as value for money? In truth, very few and that is because Annual Accounts are at best a few months out of date before we even get them.

Well, it’s my mission to make sure you really do understand the value that having and knowing the value your numbers can make. I want to lift the shroud of mystery that many accountants try to make of the numbers. I genuinely believe it’s really important for you to have, review and understand your numbers and I’m really sorry to have to tell you but once a year just isn’t going to cut it. Not if you want a successful business.

By having the right information, in a clear and concise way, at the right time will transform your business, it will:

  • Help you keep your finger on the pulse of everything that is going on within your business
  • Help you identify issues and resolve them quicker than would otherwise happen
  • Ensure nothing slips through the cracks
  • Ensure nothing is overlooked
  • Help you make better decisions by building in strong financial discipline on a regular basis
  • Makes your business more fundable
  • Makes it easier for banks to say yes when asking for an overdraft or other loan!

So if you want to have a handle on what is happening in your business, is it going to enable you to meet those goals you set for the year in terms of taking your family on that dream holiday, changing your car to the latest model or moving house or whatever it is that you are running your business for, one set of statutory accounts once a year isn’t going to cut the mustard.  What you need is monthly or at the very least quarterly accounts, that you understand, and you can see what is happening to:

  • Trends in your business for example is your turnover increasing or decreasing
  • Profitability of individual products and services
  • Peace of mind that your business is going in the right direction
  • Knowledge that the key metrics or key performance indicators are under control and moving in the right direction
  • A real understanding of what cash is needed in your business and how that looks.

The real value of Management Accounts is not only in the numbers themselves but more importantly in the discussions it enables you to have with your accountant.

One Page Strategic Plan

My most successful business owners have an annual one-page strategic plan, which list their goals, the key KPI’s, ideal customer and key numbers they need to achieve in the next year, split down in to 90 days chunks. Then we measure the progress by looking more closely on a monthly or quarterly basis at the management accounts and what those numbers means. We then discuss the actions that will move the business forward over the next 30 or 90 days, set actions and then hold the business owner accountable to achieve those goals.

We are in yet another calendar year….are you on track…did you even have a plan to work to or did you just drift…you’d be amazed at how many business owners do this and expect to be successful…..If you want the next financial year to be a success then maybe it’s time to get a plan and then work the plan…remember the definition of insanity is doing the same things and expecting different results.

If you’d like help to pull a plan together or would like to speak about what management accounts could mean to your business, then give me a call on 0161 410 0020 or email me at [email protected]

 

 

 

 

 

It is important that you take professional advice before making any decisions based on the information that you learnt here. While every effort has been made to make sure it is accurate it cannot be precisely tailored to your personal circumstances. This article is for general information only and no action should be taken, or refrained from, as a result of this information.  Professional advice should be taken based on specific circumstances in each individual case.  Whilst we endeavour to ensure that the information contained in the article is correct, no liability will be accepted by Krystal Clear Accounting which is a trading name of Kim Marlor Associates Ltd or damages of any kind arising from the contents of this communication, or for any action, inaction or decision taken as a result of using any such information.

What are Bank Feeds and how do they work?

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In short, bank feeds create a digital link between your business bank account and your accounting software, such as Xero or QuickBooks.  

This means bank transactions are automatically downloaded into the accounting software. This simple piece of automation, completely removes the need to manually input every bank receipt and payment into the accounting software. 

Having bank feeds in place, saves a HUGE amount of time bookkeeping. That’s because it completely removes the need to manually input bank transactions into the accounting software. 

Saving time bookkeeping isn’t the only benefit for the business…. 

 

 

Management Accounts Pack

What are the main benefits to a business using bank feeds?

Bank feeds automate, what was previously, a time-consuming task of entering all the bank transactions into the accounting software. 

 This saves the business a HUGE amount of time (& money) spent on bookkeeping.  

With bank transactions being downloaded from the bank every day, it means it’s quicker and easier to keep the bank balance in the accounting software up-to date. 

With the accounting software up-to date, the bank is updated daily which gives you a clearer, real-time view of your business’s cash flow.  

This makes it easier for you to plan your cashflow, and take action to improve it. 

There is always the risk of errors being made when data is being manually inputted into the accounting system. It is often time-consuming to find and correct any errors. Also, if an error is large then the Profit & loss and Balance Sheet reports will be inaccurate and potentially misleading. 

 Automating the bank transaction entry previously manual process, reduces the risk of errors being made and ensures that the bookkeeping records and reports are accurate. 

How to Link Your Bank to Xero

Ensure that your bank account is set up for online banking. This feature is typically available from all major banks. 

Log into your Xero account and navigate to the banking section. Select ‘Add Bank Account’ and follow the prompts to search for your bank. 

After adding your bank account details, you’ll see an option to set up bank feeds. Click ‘Agree’ to the terms, then securely log into your online banking portal through Xero to authorize the connection. 

 

Are Bank Feeds Safe & Secure?

Yes. 

Firstly, having bank feeds in place ONLY means bank transactions are downloaded into the accounting system. They do NOT give anyone else access to the business bank account. 

 Secondly, XERO has various security measures in place to give you a piece of mind that your financial data is safe and secure: 

 

  • Encrypted Connections: Xero uses advanced encryption technology to secure the data transmission from your bank to Xero. This means your sensitive information is encrypted during transit and cannot be intercepted or read by unauthorized parties. 

 

  • Compliance and Standards: Xero adheres to high standards of data security compliance, thus ensuring that its practices meet or exceed industry security standards and regulations. 

 

  • Regular Renewals: To maintain a high level of security, XERO requires that the bank feed connection is renewed every 90 days. This process is straightforward and helps ensure that the integrity of your financial data is always protected. 

 

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KIm Marlor the MD of Krystal Clear Accounting
krystal clear accounting

In Summary

In short, having bank feeds really saves businesses time and money on their bookkeeping.  

 They automate and eliminate what is otherwise a time consuming and error prone manual process.  

 Bank feeds is just one of the ways technology can be used to help business owners improve the financial side of their business.

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