Interested parties

1. Owners (Sole Traders) and Partners

• What they want: They are concerned with the profitability and growth of the business.
• Why: As owners, their return on investment depends on how much profit is generated. They use the SPL to see if the business is making money. They also look at the SFP to assess the value of their capital invested.
• Key Decision: Should they reinvest profits into the business or withdraw them as drawings?

2. Managers

• What they want: Managers need detailed, frequent information to control the business day-to-day.
• Why: Owners often do not manage daily operations. Managers use budgets (planned figures) compared with actual results to identify variances. If actual costs are higher than budgeted, managers can investigate and take corrective action.
• Key Decision: Are we meeting our targets? Do we need to cut costs or change pricing strategies?

3. Employees

• What they want: They are interested in the stability and profitability of the business.
• Why: Job security depends on the business surviving. Profitability often links to the ability to pay wages, bonuses, and pensions. If a business is making losses, employees may fear redundancy.
• Key Decision: Is the business healthy enough to offer wage increases or job security?

4. Banks, Investors, and Lenders

• What they want: They are primarily concerned with liquidity (ability to pay short-term debts) and solvency (ability to repay long-term loans).
• Why: Unlike owners, lenders do not care about profit growth as much as they care about getting their money back. They look at the SFP to calculate ratios like the current ratio (liquidity) and gearing (solvency). They also check if the business generates enough cash flow to pay interest.
• Key Decision: Should we lend money to this business? What interest rate should we charge?

5. Suppliers

• What they want: They need to know if the business can pay its bills (trade payables).
• Why: If a supplier sells goods on credit, they risk not being paid. They look at the SFP to assess the business's liquidity and cash position before extending further credit.
• Key Decision: Should we allow this customer to buy on credit terms?

6. Customers

• What they want: They are interested in the long-term viability of the business.
• Why: If a customer has bought warranties, spare parts, or relies on the business for ongoing supply, they need to know the business will still exist in the future. A bankrupt business cannot honor warranties or continue supplying goods.
• Key Decision: Can I trust this business to support my purchase in the long term?

7. Governments / Tax Authorities

• What they want: They need to ensure the correct amount of tax is paid.
• Why: The government uses accounting records to calculate Corporation Tax (for companies) or Income Tax (for sole traders/partners). They also monitor businesses for compliance with labor laws and environmental regulations.
• Key Decision: Has the business declared its taxable profit correctly?

8. Club Members (Non-profit Organizations)

• What they want: They are interested in how funds are being used, not in profit.
• Why: Clubs and societies do not aim to make a profit for owners. Instead, they use an Income and Expenditure Account (similar to SPL but excludes capital items) to show if subscription income covers expenses. Any surplus is reinvested into the club facilities or activities.
• Key Decision: Are our funds being used efficiently for the club's purposes? Do we need to increase subscriptions?

9. Other Interested Parties (Public and Environmental Bodies)

• What they want: They focus on social responsibility and environmental impact.
• Why: Modern businesses are expected to report on their carbon footprint, waste management, and community involvement. Environmental bodies check if the business is complying with green regulations. The public may boycott businesses that harm the environment.
• Key Decision: Is this business operating ethically and sustainably?