A Forex Managed Account Vs Trading Yourself

Investing in Forex can sometimes become very challenging especially when you have a career, family, and many other time consuming responsibilities. This is why several people choose a Forex managed account over a self traded account.

In this article we will be reviewing the main advantages and disadvantages of investing in currencies through a Forex managed account and an account that you trade yourself.

Take all the guesswork out of Forex trading with Forex managed accounts: Investing and trading the Fx market can become a very frustrating task for several traders who are not succeeding at it. Many investors have experienced substantial losses by trying to invest in Forex on their own.

Some of them have bought courses and trading systems to try to become successful traders but have failed because they lack other qualities to become a successful trader such as appropriate money management and trading psychology.

When you invest in a Forex managed account you can successfully take all of the guesswork and difficulty out of Forex trading since you will have a professional Forex trader manage and operate your account for you.

Paying performance and management fees against taking losses on your account: It is important to consider the real cost of not succeeding at trading Forex on your own. Several traders lose trading account after trading account by investing themselves in currency trading.

This is why considering and measuring the real cost of unsuccessful trading against paying a money management a performance fee for trading your account for you. Many times paying a performance fee to have a Forex managed account makes more sense than continuing to lose money in the markets.

Taking advantage of someone else’s success by having them manage your account: This is a practice that can be seen in several professional areas in life. You buy a book written by a famous chef to learn how to prepare a new meal or you attend a conference on how to earn more by doing what you like to mention two examples.

We hire and follow experts and professionals to increase our probabilities to succeed in certain areas of life. Trading is no different. You wouldn’t try to take your own tooth out or would try to build a house with an architect. Then why would you try to trade alone or on your own?

Having a professional Forex trader and fund manager trade your account for you can significantly increase your chances to succeed in currency investments.

Diversifying your trading by investing in someone else’s strategy as you trade: Maybe you want to continue to trade but would like to also diversify your currency investments by investing in someone else’s trading system.

This can become a great way to not only diversify your investments but to hedge against your losses in your own trading. When you have a Forex managed account that is being professionally traded by a Forex trader and money manager you will be able to earn while you learn and continue to trade on your own.

We hope this article has helped you to understand how a Forex managed account differentiates from a Forex trading account that you operate yourself.

The Benefits of Having Management Accounts Prepared for a Small Business

Small business owners should prepare management accounts alongside financial accounts. Management accounts are important for tracking, recording and reporting financial information for management purposes. There are no set standards for preparing managerial accounts and any business can design their own style according to their operation and business needs. There are several benefits associated with these accounts. Not only can small business owners enjoy the benefits of creating a competitive advantage but can also leverage the way they do business in their markets.

Reduce Expenses

Management accounts can help a small business to lower its operating costs. The information from these accounts will help the business owner to review the economic resources and other business operations. It helps them to understand the cost of doing business in their current situation. They will know the costs of producing goods and services and find out if cheaper raw materials will affect the quality of the final products and how consumers will respond. This will help them to source for cheaper factors of production and reduce the cost of doing business.

Improve Cash Flow

Management accounts involve a review of the budget in comparison with the actual expenditure. This is a good way for small businesses to understand their roadmap to the future. Management accounts will go through the company’s financial history and come up with a master budget for the entire business. The owners will then know when to spend money and which items are either necessary or unnecessary.

Business Decision

Management accounts also help the small business owner to make appropriate decisions based on financial facts. Without these accounts, many managers make decisions based on qualitative analysis – this can be dangerous in the long run. Management accounts provide quantitative analysis for several decision making opportunities. Small business managers will be able to have a clear understanding of the implications they expect when they make their business decisions.

Increase Financial Returns

Small businesses can increase their financial returns using managerial accounts. This is because the accountant can prepare a financial forecast showing consumer trends, potential sales and the effects of pricing strategies in the economic marketplace. The small business owner will be in a better position to know the amount of products to produce in the current market prices in an anticipation to beat the competition in any future price changes.

Determining Production Quantities

A company’s intention is to produce more than one product or service using the same resources. For example, a baker will produce cookies and bread using the same resources. A good accounting firm will make use of the workers to perform both auditing and preparation of management accounts. This will help business owners to understand which products to produce most and which ones to reduce. This is a complex process that involves market demand analysis, capacity verifications, and costs of production and financial ratios that can be achieved through management accounts.

How Far To Process Products

Small business owners are often unable to clearly tell whether to process a product further or sell it in whatever form. Some think it would be more profitable to add value to the product while others prefer to sell it raw. Management accounts will help a small business owner to understand how far a product or service should be processed to maximize profits. The accounts show what happens when factors of production are increased even by one unit.

Importance Of Getting Regular Management Accounts Prepared For A Business

Many small businesses are aware of the importance of keeping business records. Unfortunately, most of them don’t give regular management accounts the importance it deserves. In fact, many will give priority to other records such as financial and cost accounting. Well, this should not be the case. Management accounts are equally as important. Unlike the other accounts (cost and financial), management accounts are based on future predictions. They focus on key performance indicators (KPIs) hence help in the running of a small business. The following are some benefits of management accounts:

Quick Decision Making

One of the main benefits of having management accounts prepared regularly is to improve decision making. Similar to large organisations, a small business will make decisions based on the past, current as well as future performance. The management accounts rely on the available information and future expectations. The management will therefore make their decision based on what the accounts predict. Having the accounts prepared on time quickens the decision making as they will have some hard facts to rely on.

Proper Planning

Running a business is all about proper planning. Knowing which departments to concentrate on, which product requires improvement, what policy needs to be implemented, where to invest in future are some of the decisions a business owner and manager need to make. Proper accounts will contain a breakdown of past performances and likely future happening. In fact, the accounts can be used to stimulate future activities. This helps in proper planning of a business so as to match the future expectations.

Performance Management

The success of a business is mainly gauged on its performance. Did it meet the shareholders and stakeholders expectations? Were the set targets achieved? Is it possible to surpass previous performance? All these questions point at future performance based on current market conditions and parameters. This is one area where regular management accounts are of most importance. The accounts comprise of probabilities, time-series analysis, trend analysis and much more. Such market indicators help in gauging and managing the performance of the small business.

Formulation and Implementation of Strategies

Managers as well as the business owner are required to be financially aware of the business position. This is the only way he may come up with strategies that will guide the business now and in the future. Management accounts help in formulating strategies. The people in charge use the key performance indicators (KPIs) to make decisions. The same accounts are also used to implement a strategy. Using strategies such as simulation analysis helps a business estimate performance even before a plan is rolled out.

Cost accounting and financial accounting are based on activities that have already happened. But management accounting usually focuses on future predictions. Due to this, the accounts require a high level of accuracy. The suitability of the accounts is greatly influenced by the accuracy of financial as well as cost accounting. It is therefore important for a small business to not only ensure accuracy but also that the correct strategy is formulated and implemented. Having regular management accounts is one of the most effective ways of managing and improving business performance in both short as well as long run.

Forex Trading Accounts – Do You Feel Comfortable With A Managed Account?

By now, you probably know there are many Forex accounts ranging from the smaller accounts opened by traders at home to the larger accounts that banks and large firms use. One type of Forex account is called the managed Forex.

The word manager stems from the word manage which means to guide something like a career or an account. When something is managed, it means an individual with the skills necessary to be successful with what’s being managed.

A managed Forex is an account that’s being managed by someone other than the investor who opens the account. Usually the investor is charged a fee by the person who runs the managed account.

When you set up a managed Forex account, you are giving the manager of the account the right to make your trading decisions for you, so it’s important that you choose the manager wisely.

Look for someone who has years of experience handling managed accounts and not someone who is hoping to learn how to handle a Forex account by making yours the guinea pig.

If you decide to set up a managed account, you do have the right to tell the manager what you expect in terms of performance and what your financial goals are. When you discuss the managed Forex, if the person you’re thinking of using to handle your account starts talking about making trades that you’re not comfortable making, you might want to consider whether you should open an account with that person.

Since the person operating the managed Forex account will be the one handling your investment and basically running the show, you need to make sure they know what they’re doing. Find out if they have a bulldog reputation-which is good when trading Forex, because bulldog managers know when to grip and hang on, but when it comes to running a managed account, you don’t want someone who won’t listen to you.

The good news is that nine times out of ten, the person managing a managed Forex account acts in a professional manner and you stand to gain from his professionalism and years of trading know how.

One of the bad sides to having this type of account is; if you think a currency pair is going to go one way and you want to take advantage of it, you won’t have the option of having that choice to make.

The person behind your account will be the one who gets to move or stand still. So when it comes to a managed Forex accounts, you want someone who would move when you would and sit still when you would.

How to Produce Management Accounts – A Quick Guide

This guide is primarily aimed at fresh graduates, entry level job hires, professional students, and any individual related to the profession of accountancy (and management accountancy in particular), who wishes to have a quick overview of how a set of management accounts can be produced and what entails in its production, without having to read a 200 page book. Most of the knowledge set out henceforth is from the point of view of working in a service based industry and assumes the reader to have a reasonable knowledge of the fundamental concepts of accounting.

The scope of this guide is to give the readers a sequence of activities that I have followed, in my own experience, to put together a monthly reporting pack for my senior management team. This sequence of activities and the importance that I attach to each activity can be very different for the line of business that you are in. Having said that, I do expect that most of you will develop a more vivid and succinct picture of the production process, which you can then imitate and integrate into your own particular circumstances.

So, let’s begin!

What are we trying to produce?

In most organisations, the board or senior management requires the management accountant/chief accountant to produce a monthly profit and loss account/income statement, so that the organisation’s performance against set budgets (mostly prepared at the beginning of each financial year) and expected forecasts (mostly updated at each month end) can be gauged. A monthly management accounting reporting pack does not only include the monthly income statement, but a range of other useful reports too. However, an income statement does constitute the bulk of the reporting and this is what we will try to produce in this guide.

In a nut shell, through a certain set of activities and for a given period (usually a month), we determine: the revenues generated by the business, the costs incurred in the production of such revenues (commonly known as ‘cost of goods/services sold’) and the costs incurred to provide support to such revenue generation and goods/services production. This cost is sometimes referred to as the central overheads’ costs or support functions’ costs or the service-centre costs.

What you should know before you begin production?

Most businesses will use a “Chart of Accounts” in their accounting systems (may it be: Sage, SAP, Oracle, SUN, Viztopia etc.) to classify and record various types of transactions involving differing kinds of assets, liabilities, capital, revenues, and costs.

A Chart of Accounts or COA, as I like to call it, is a list of all nominal ledger accounts that a business intends to use to record its business transactions. This list of accounts can be in the shape of numbers, alphabets or alpha-numeric values. Due to my own experience, I prefer numbers.

So, to give an example, our full COA might range between the numbers 0001 and 9999 and within this range, we can have multiple ranges, each representing an asset, liability, capital, revenue or costs type. As an example, the range 5000-5999 might only represent different kinds of revenue streams for a business and the range 1000-1999 might only refer to all fixed assets held by the business.

These are just examples of how the COA could be divided. You need to know what range/s of nominal account codes in your business’s COA constitutes the revenues, the cost of goods/services sold, the central overheads, the assets, the liabilities, and the capital.

You will not be able to understand the income statement (which is what you are essentially trying to produce), unless you understand the Chart of Accounts. The income statement is basically reading all data held in the COA range/s relating to revenues and costs for a given month/period.

Once you have understood the division of the COA, you can then truly appreciate the monthly income statement template that your organisation already has in place. If you are assigned the task to build one from scratch, then this guide is not for you. In this guide, we have assumed that your organisation already has a certain monthly reporting template in place, of which the income statement is the main one.

A vast number of organisations produce their monthly management accounts in Microsoft Excel. The income statement, depending on the business, will be divided into multiple sections. For purposes of this guide, we will use the following sections that make up a typical income statement:

• Revenue
• Cost Of Goods/Services Sold
• Gross Profit
• Selling Expenses
• Marketing Expenses
• Contribution To Central Overheads
• Central Overheads Recharge
• EBITDA

Each of the above sections of the income statement will be made up of a number of nominal codes from the COA. As an example, the revenue section of the income statement in MS Excel might be pulling together/summing the data from codes 5000-5999 range from the main accounting software, for a given month. How does excel do that? Well, most organisations use some sort of intermediary excel tool to pull data out from the main accounting software (where a record of transactions sit) onto excel. That is why it is imperative to know your business specific COA, so that you know what makes up revenue and what makes up, lets say, cost of goods sold.

To recapture what we have just said above:

 Before you even open up your business’s monthly reporting pack, of which the income statement template is the most important, you need to understand your Chart of Accounts.
 Most management accounts’ packs/templates, are made in excel
 Transactions are recorded using some accounting software, such as Sage, Sun, Sap etc.
 The monthly income statement template is divided into sections, such as Revenue, Cost of Sales, Gross profit etc. Each section is reading a number of nominal codes from the main accounting software and summing them up for a given periodic month in the ms excel reporting templates.
 This summing/collation of information into excel from the accounting software, using nominal codes, is usually done with the help of an excel Add-on tool.

Hopefully, so far, so good! Let’s move ahead now.

The Production Process

Broadly speaking, the finance department of almost all businesses, ranging from small and medium to big publicly listed companies, can have the following sub-departments, either separately or combined, within the main finance function:

• Sales Order Processing – SOP
• Sales Ledger
• Credit Control
• Purchase Ledger
• Management Accountancy
• Financial Accountancy

On a day to day basis, orders are processed on the sales ledger system. The sales ledger system can exist within a company’s main accounting software or it could be a separate system altogether. The result of sales order processing is the production of sales invoices.

These sales invoices are then chased by the credit control department for collection of the monies due. Once monies are receipted at the bank, such receipts are recorded by the sales ledger department onto the main accounting system.

Alongside this, on a daily basis, the purchase ledger department is processing ‘purchase invoices’ i.e. bills that the business has to pay. For most businesses, the recording of purchase invoices involves:

 Categorizing / classifying each bill to a cost type/s
 Assigning the cost to a specific product &/or department &/or business unit

E.g. If a business has spent £5,000 on printing and binding of a magazine (assuming a magazine is a “product” / “revenue stream” for the business), the purchase ledger manager would record this cost as a direct cost (giving it a direct cost nominal ledger code from the Chart of Accounts) and assign the cost incurred to the “Production Department” and the “Print Publications” Business Unit of that organisation.

The bill is settled in due course by the purchase ledger manager.

The bottom line is that on a day to day basis, sales invoices are being raised and monies received, alongside bills being recorded and settled. At the end of each month or at a cut off date just before the end of a month, you will request all relevant departments to make no further entries in the period for which management accounts are to be prepared. Your management accounts start here!

MPL Media Plc

For the purpose of this quick guide, we will create a fictional organisation, operating in the media industry producing monthly magazines. We shall call it MPL Media Plc.

MPL media has all the above mentioned finance functions as well as the following in its organisational structure:

• Production Department
• Editorial Department
• Data and Marketing Department
• IT
• Facilities
• HR

MPL media derives revenue from selling advertising space on its magazines. All orders relating to a particular magazine are invoiced upon publication and distribution of the magazine. All design work and editorial content of the magazine is created in-house by the editorial and production departments, whereas the printing, binding, wrapping and distribution of the magazines are carried out by selected outside suppliers.
MPL media uses an excel tool to pull data out from its accounting software into excel. It can do this on a transactional level as well as mere summaries.

ACTIVITY 1 – Direct Cost Prepayments

Having instructed/stopped any further entries to be made in the month for which the management accounts are to be produced, the first in the list of sequential activities that the management accountant carries out is the prepayment of the direct costs.

As mentioned earlier, some of the nominal codes in the COA will relate to the cost of goods/services sold. In the case of MPL media, all nominal ledger codes relating to printing, wrapping, design, editorial content and distribution of a magazine are treated as “direct costs” of producing such a magazine. In addition, each magazine being sold by the business will carry a publication date. By virtue of this publication date, we can ascertain what and how many magazines to recognize as revenue and costs in the month, for which management accounts are being produced.