Using Management Accounts Effectively (BN8)
Hello, my name is Eve from Business Nirvana, today I am going to discuss how to monitor the effectiveness of your management accounts.
We established in the previous videos that every act and decision that occurs within a business has a financial consequence and a numerical value. We discussed that the management team can decide how to view or utilise this numerical information as a means of making sensible business decisions and that this information is contained within the management accounts.
One other thing to reiterate is that software and people make mistakes and so a system of micro audits should occur to check the integrity of data. This could include test purchasing of product via the ecommerce system through to a traditional stock take.
In short we have agreed that the information contained within ones management accounts must be meaningful to the managers, accurate and delivered in a timely manner in an easy to understand format.
So now we need to consider how best to use this information.
Before doing so let’s just remind ourselves that most businesses that have gone into liquidation have had “trouble with their management accounts.”
As we have now resolved the issues of data integrity - trouble in this context might be as simple as failing to use your management accounts as an aid in making business decisions.
As all businesses as with people are unique; your management accounts will be unique and how you use them will also be specific to your business. There are however one or twom fundamentals that must remain the same.
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