The organization provides design services, which is a long-term process.
Before starting work on a project, customers made an advance payment of 50%. Since there was never a shortage of funds in circulation, they were paid out as dividends at the end of each month. At some point, a crisis occurred, as a result of which the flow of new contracts sharply decreased, and funds for work on current and already paid for projects by clients became insufficient.
Shortage of funds
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With a balance sheet, it is easy to see that the entire business was operating on accounts payable, and this must be taken into account before paying dividends.
If the company's profit is small cyprus email list and there is a lot of free money, then this is evidence that the business is characterized by large accounts payable. With the help of the balance sheet, it is easy to track its parameters.
The most common question among entrepreneurs is the following phrase: “Why is there never enough money?”
This question seems especially inappropriate if the company has a profit. When analyzing the balance sheet, it immediately becomes clear where the money is: invested in fixed assets, goods, or in accounts receivable.
To release funds from freezing, you must do the following:
more actively cooperate with clients on the issue of refunds;
promptly sell goods from stock, and then order smaller quantities, but more frequently;
revise the approach to turnover and financial cycles, the calculation of which is based on the balance sheet.
The management balance sheet shows where the money is in a situation where there is profit but no funds.
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5 Differences Between a Management Balance Sheet and an Accounting Balance Sheet
Management reporting has several differences from accounting reporting. Let's look at each of them in more detail.
Practical significance
Accounting is a source of information for calculating the tax base, which is then sent to the Federal Tax Service. In addition, accounting information is used in management accounting. But in order for this data to participate in decision-making, it must be supplemented with non-financial information.
The management report is documentation that is only necessary for internal use, i.e. this data is not transferred to any third party. Based on this information, operational decisions are made, all business risks are controlled.
Efficiency
The head of the organization makes decisions daily and more than once, so he must have a real picture of the state of affairs of the company. To do this, it is necessary to establish a process for promptly receiving information. In management accounting, the speed of receiving data is primarily important, even if their accuracy is slightly distorted.
Differences between management and accounting balance sheets
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Quick reports that are updated in real time may contain approximate data. Accounting documents exclude approximate data, as do planned management reports (weekly, monthly, quarterly and annual). They must contain the most accurate information.