Home topics finance finance-cash-flow Cashflow Hot Tips Cashflow Using annual accounts to critique your business Lucy Cormack October 13, 2011 SMEs need to make better use of their year-end account management figures, as annual accounts act as the most honest critic of a business’ success. According to HLB Mann Judd Sydney partner Simon James, business owners should review their annual results to better understand the business how it could be made more profitable. “End of year accounts deal with what actually happened, not what might have happened, or what someone else thinks did happen, or indeed hoped would happen.” He stresses the importance of knowing how financially sound your business is, saying too many business owners rely on others do to the work while they turn a blind eye. “Those that are on top of their financial reports are also more likely to take early correcting action to resolve emerging problem areas so that they are more likely to survive any economic downturn.” James said business should satisfy themselves over five basic areas: 1. Check profit This is a critical comparison every year. How does the profit compare with the year before? Is it in line with what was expected? If not, look at the total income to see if there is a big difference from the year before. If income has dropped in an unexpected way, find out why. Which customers are buying more or less and what is the reason for this trend? If income hasn’t varied significantly