Mind the gap! Your business could be missing out on valuable insights.
Balance sheets.
Profit and loss calculations.
Annual accounts.
They are all key for the smooth running of a company. But this is just the tip of the financial information iceberg.
To excel and grow, businesses and their leaders need regular and detailed insights into their current and future financial performance. In our latest myth-buster, we explain why you can’t rely on your accountant to tick all the boxes.
A company’s finances are a mine of information. From identifying your strongest products to highlighting potential cost savings, accurate and timely financial information can make the difference between success and failure. But many companies are missing out on vital insights by assuming the information they get from their accountant is all they need.
Reviewing the past
Every limited company has to file statutory annual accounts to meet their regulatory obligations. Often prepared by an external accountant, these will normally include a balance sheet, a profit and loss account, a director’s report and any supporting notes.
Statutory accounts tell you what happened by providing a summary of the previous year’s trading. But a lot can change in the space of a year. Looking back isn’t enough when you want to be moving forward. One false step could expose your company to added costs and risks, leaving your growth plans in tatters.
“Statutory accounts are an important part of the financial picture and can help benchmark your company’s performance against similar businesses,” said Cara Smith, Associate Director at Insight Associates. “However, relying solely on them is a bit like driving while looking in the rear-view mirror. Statutory accounts don’t provide the visibility you need to respond to current challenges and opportunities.”
Understanding the present
So how can you shift the financial lens from the past to the present? This is where management accounts come to the fore.
Management accounts tell you what is happening here and now, which can not only help to improve financial performance but also unlock valuable business insights. Is a new service stream turning a profit? Is there enough surplus cash to hire extra staff?
Normally prepared monthly and/or quarterly, management reports provide information that can help companies make smarter decisions and develop stronger plans. As CHESS Homeless, a charity providing high-quality accommodation for the homeless, discovered when it started working with Insight Associates (read our case study here).
The charity’s board receives monthly management accounts, which provide the financial insights needed to run the organisation efficiently and plan for the future. “We finally have factual, quality financial data that we can rely on,” commented Rob Saggs, Director of CHESS Homeless, who particularly values the reports that show how the charity is performing against its budget. “This enables us to keep aligned with our mission,” he added.
Predicting the future
As well as documenting the past and understanding the present, companies need to predict the future. Financial forecasting provides insights into what is likely to happen in the months and years to come. Are operating costs going to rise and by how much? How long will a new investment take to deliver a return?
Forecasting can be particularly beneficial for organisations that are focused on growth as it can help highlight potential gaps in capital or resource. It can also provide the solid data needed to secure funding and attract partners to support growth.
As Rob at CHESS Homeless explained: “We knew we were in a huge growth phase. Quality financial data has helped us forecast where we’re going and have a lot more confidence in our decisions as we grow.”
See the full picture
Insight Associates believes in helping organisations see the full picture. We bring together past, present and future financial information, so businesses and non-profits can keep growing.
Instead of relying on limited internal teams or expensive external providers, Insight Associates offers a cost-effective outsourced service that includes statutory accounts, management reports and strategic financial insights.
We use iplicit, a market-leading cloud-based platform, to capture all the financial information you need to make confident decisions – and we make accessing it easy with interactive dashboards, real-time reports and analytical tools.
The result? Cashflow can be tracked. Profitability can be analysed. And business performance can be showcased. Instead of basing decisions on past numbers, organisations can understand present outcomes and seize future opportunities.
That’s not all. iplicit can also provide charities and non-profits with additional visibility of key financial data needed to support complex funding arrangements and governance requirements.
Features, such as fund and grant accounting, restricted and unrestricted fund tracking, detailed audit trails and intuitive reporting dashboards, help trustees and leadership teams maintain transparency while making informed decisions about future activities and resource allocation.
The difference between compliance-focused accounting and proactive financial management can be transformative. And that transformation can begin today. It’s time to stop relying on your accountant to provide all the financial information you need and start unlocking the big picture to succeed.
