What are management reports? Something you’ve probably heard an accountant talking about at some stage.
Management reports are regular reporting for business owners in the form of data, numbers or visuals. To provide numbers and information that can be used by business owners in their decision making.
It helps to tell the story behind the numbers of the business. What happened in the business and importantly the implications of how actions are going to impact the business moving forward.
We believe that management reports are only as valuable as the explanation that goes with them. If the recipient can’t understand the information contained within the report, they hold no value.
![From what we have seen, business owners SHOULD NOT blindly pay their May tax without advice as to whether their profitability warrants it. Why? Because, 1/3rd of our clients won’t be paying tax in May. Accountants are on the front line of the economy and we have real time financial data. At the time of writing this, it is less than 10 days after the end of the financial year, and we’ve mostly finished reviewing the profitability of a good cross-section of the NZ economy: construction, engineering, marketing, e-commerce, services. All sorts. Here’s some tax insight that might help you understand what’s happening in the economy. AND, hopefully understand how tax works for many of you businesses owners. For some background, a lot of NZ SME’s pay tax in August, January and May to stay current with tax. This is loosely based on their profitability of the year before (2023FY ended 31/3/2023). This means that when they get their accounts done, they have hopefully cleared taxes on profits for the current financial year (2024FY ended 31/3/2024). We don't just tell our clients to pay tax based on last year. Every year is different. We review our clients' profitability throughout the year and by this final payment on the 7th of May, we have a really clear insight as to how profitable the financial year was. The 2 common themes are: 🔸 A lot of businesses don’t even need to make a payment in May because their profitability will be lower than last financial year, so they have less tax to pay. They've paid enough tax in August & January. 🔸 Some of those who do need to pay tax (even at a higher rate) are struggling to collect the cash (income from the work they’ve done) so they are battling to see how they can make the payment.
One of the tricky things for a growing business is that IF they don’t collect the money for the work they do in a timely manner, they will always struggle to pay their tax. Why? Because they’ve done the work, sent the invoice which recognises revenue and profit, BUT they haven’t turned it into cash in their business. [Continued in comments...]](https://nextadvisory.nz/wp-content/plugins/instagram-feed/img/placeholder.png)
