Management Accounts
10/09/2009
Management Accounts are a key tool for managing the financial performance of the business. Whilst most larger dealerships and groups have a robust management accounts model there are many owner/driver dealerships who may be unaware of the benefits arising from the use of the accounts as a management tool.
The Management Accounts model can be tailor made to suit the business and can be mapped to download from the trial balance produced by the dealer management system. Assuming, of course, that the DMS is capable of producing a trial balance.
The management team will then have a record of the performance and financial position of the business each month. The model can include the budget and/or prior year figures to aid comparison.
The balance sheet will provide a snapshot of the financial position of the business at that date, and will show the resources employed by the business to generate the profit earned.
The main body of the accounts will show, in as much detail as is required, the performance of each department for the month and for the year to date, compared to budget or prior year, and the expenses incurred to produce that result. Useful KPIs can be added to aid analysis.
Most benefit is to be gained when the Management Accounts are used to improve performance. A management review of the accounts can lead to discussions such as ‘What did we do well? How can we maximise our success? Where did we go wrong? How can we do better?'
The value of the Management Accounts model is strengthened when used in conjunction with the monthly balance sheet reconciliations as mentioned in a previous article. A fully reconciled balance sheet will give the reader confidence in the figures used to produce the accounts.
If you have any questions relating to the above our Dealer Assistance team will be happy to help - please call 07824 812122 or 07854 549389.