Many businesses do not have adequate systems for identifying the amounts of profit or loss generated by different products and services, or even by the business as a whole, yet this information is absolutely essential if the business is to grow stronger. Similarly, it is important to know the costs of different areas of administration so that overheads are not allowed to swallow the profits made from gross margins. To keep track of where profits and costs are coming from, it is necessary to have a properly designed management information system able to provide all the essential facts quickly and accurately.
Annual accounts are not enough to control a business. You must know what is happening to profits and losses on a much more regular basis. Most businesses need to produce operating statements at quarterly intervals at least and, better still, at monthly or even weekly intervals. There are even some businesses where daily financial information is essential.
Computers can provide fast and detailed information. The business owner can now choose from a very wide selection of small computers and standard accounting programs which, at reasonable cost, can produce most of the accounting and management information needed to run a business from day to day. It is important, however, to get independent professional advice on the suitability of a system for your particular business and to ensure that proper audit controls are provided. Increasingly, we are using new online and cloud based systems, which have extremely high levels of security and backup, as well as allowing access to the information from a variety of locations.