I do not doubt that many business owners havea 'feel' for their own company and instinctively know when trouble is 'around the corner'. Management accounts are perceived as a time consuming task 'better left to the accountant' once a year. For most businesses this is a fallacy. Obtaining the necessary figures is more about practice than time or skill. Once you start building up a database of monthly information you will start to see trends.
Trends are a business owner s early warning system.
When you have established trends you can identify anomalies when they happen, and not when they take a negative effect on your cash flow, sales, etc. You can manipulate current needs, in the knowledge of future trends. The effect of such changes can drastically increase your cash flow and thereby reduce your overdraft and financing costs. It has been my experience to turnaround a company's fortune solely by managing a company's current assets and liabilities. It is arguable that extra production increases the fixed costs such as electricity etc.