All companies need to file statutory accounts every year but it’s an open question as to how much value if any this information provides to the business. The issues include:
- Old information which is out of date - the earliest numbers are at least 12 months out of date, perhaps as much as 21 months if they are prepared just in time to file.
- Insufficient information: they are in a fixed format, abbreviated in some respects and are not user friendly.
- Difficult to understand: they are really in accountants talk, to a prescribed Companies House format, not easy
- Does not show gross margin percentages, charts, comparison over years
- No Cashflow information: how do you know that you will have enough cash to pay your team next week, next month or next year?
- No meaningful comparisons: in a growing or changing business comparing to last year is not helpful, you need to see how you compare to your plans.
- Only meet the needs of Companies House
What’s the alternative – customised management accounts precisely to your specification so that you can understand them and then use them to advantage in reducing costs, improving margins and boosting profitability. They will include KPIs – Key performance Indicators e.g. XXXX. You can even include benchmarking