Why statutory accounts are not enough

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:

  1. Old information which is out of date - the earliest numbers are at least 12 months out of date, perhaps as much as 21 months if they are prepared just in time to file.
  2. Insufficient information: they are in a fixed format, abbreviated in some respects and are not user friendly.
  3. Difficult to understand: they are really in accountants talk, to a prescribed Companies House format, not easy
  4. Does not show gross margin percentages, charts, comparison over years
  5. No Cashflow information: how do you know that you will have enough cash to pay your team next week, next month or next year?
  6. 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.
  7. 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

Management accounts

Blog - Remember that the main thing is that the main thing is the main thing

More than 25 years ago I attended a retirement party for the FD of a major company in London. Well into the evening this guy had a piece of advice for me. He said “Remember that the main thing is that the main thing is the main thing”. We’d both had a good few glasses and it wasn’t until the next day that finally I got my brain round this.

When I subsequently started BookCheck in 1994 the first accounting system that we dealt with was Sage Line 50. Being the market leader for serious businesses most of our clients in the early years used Sage.

We provided only two services: Book-keeping with Management Accounts and a Payroll bureau.

Our policy then was to handle any accounting system and we dealt with a good number. About 10 years ago we made a policy decision to focus only on Sage. The reason for this was to be very good at the one subject. This turned out to be a successful policy in that it made life a lot easier in terms of recruitment, training, support and control.

Then Xero appeared. We kept a watchful eye in the early years until eventually we started to see serious prospects. At that point we trained up a part of our business to be able to handle this quite different software. This has developed in the last few years to the situation where now about 20% of our clients and about 40% of our prospects are on Xero. The question has now arisen, should we also include QuickBooks which is similar to Xero.

So should we widen our focus?

Incidentally, after 24 years we are still focused on providing just the two services we started out with, albeit now with different delivery such as Cloud. So I think we’ve stuck to the advice?