As a business owner or leader, you might receive your management reports monthly or quarterly. You may be managing your own accounting software and reviewing the Profit & Loss Statement and/or Balance Sheet. But how often are you reading your management reports?

On the surface your management reports appear to be a reflective measure based on past transactions. IN truth, they hold a wealth of information that can help you prepare for the future!

Here are our top tips for how your management reports can help you plan for the future of your business.

1. Review historical financial data

Look at past financial performance, including income statements and balance sheets, to identify trends and make informed projections for the future.

2. Create a budget

Using historical data and projected trends, create a budget for future expenses and revenue. This can help you plan for resources and allocate them effectively.

3. Identify areas for improvement

Look for areas where expenses are higher than expected or revenue is lower than planned. This can help you identify areas for cost cutting or increased investment.

4. Monitor actual results

Compare actual results against the budget regularly and take corrective action as needed. This can help you stay on track and make changes if necessary.

5. Evaluate performance

Use management accounting metrics, such as return on investment or cost of goods sold, to evaluate your company's performance. This can help you identify areas for improvement and make decisions to drive growth.

If you are not yet in the habit of reviewing your management reports the best place to start is with your Profit & Loss statement, with a focus on:

Revenues

Here you want to understand sources of income and the overall trend in revenue over a period of time.

Expenses

Reviewing the company's expenses help understand the cost structure and how expenses are changing over time. From here you can identify cost saving opportunities and understand the impact of expenses on profitability.

Net income

Overall profitability is the story told by your net income (or loss). This will give insight into the company's financial performance and whether it is generating enough profit to cover its obligations and reinvest in growth.

Any time is a good time to take more control over your business reporting and start planning for the future. Using your management reports as part of a regular planning process can help you make informed decisions and achieve your goals. They happen each month so start there.

Worried about how you can possibly add this to the growing list of things you need to do? Contact our team at PT Ignite to see how we can put hours back in your day with the support of our qualified Accountants and Bookkeepers powering your business.