What are management accounts?

Management accounts are financial reports that offer insights into your business’s performance. Business owners and managers use them to base their strategic planning, thus the name. They are usually produced on a monthly or quarterly basis.

Producing them this often keeps you informed on current happenings, with enough insights to affect performance. Additionally, the short periods allow for timely course correction should certain strategies not work as expected.

Why do I need management accounts?

Management accounts offer a more comprehensive outlook on your business. The balance sheet and similar statements tend to focus on the money without including circumstances around how that money was made. It is important to understand those circumstances to determine what you need to keep doing, what to stop, and what to start doing.

What should you include in your management accounts?

Different companies have unique requirements and expectations, and factors such as previous quarter performance also influence what should be included in the management accounts. Additionally, your objectives going forth partly dictate what areas you’ll need management accounts to focus on. Typically, they will include key performance indicators (KPIs), cash position, P&L statement, and a balance sheet.

What are the benefits of producing management accounts?

Management accounts help you and your management team make informed decisions based on the latest information about your business. Making those decisions based on annual reports or waiting that long to act severely diminishes your ability to react to market and performance trends.

You also get to measure individual and business KPIs. This way, you can tell what parts of your plans and projections are working and which ones need a review.

These types of financial reports are also invaluable in helping you maintain control over your cash flow. The monthly or quarterly approach helps you spot fluctuations and take steps to prevent negative trends before they become too much for the business to recover from.

Management accounts also help you identify instances of fraud before they get out of hand. Regular reviews also discourage such vices.

What can management accounts be used for?

Management accounts are useful in three main scenarios; record-keeping, planning and control, and decision-making. For example, they capture business transaction details and help prepare timely reports for sharing with investors. Additionally, they form the right basis for seeking funding, undertaking expansion projects, or cutting losses and poor-performing sections of the business.

Who should produce management accounts?

You need a qualified and experienced accountant to prepare management accounts for you. Their keen understanding of financial statements combines well with your focus on business operations and KPIs to produce a useful report to base your decisions upon.

Conclusion

Management accounts go beyond standard financial statements to give you a detailed look at the business and help you make informed decisions. It’s likely you will need an accountant to help you craft a detailed and relevant one.

Accounting Services

We offer a wide range of services to help businesses in all aspects of their financial operations including;

• Business Plans.
• Bookkeeping.
• Year End Accounts.
• Self-Assessment Returns.
• Capital Gains Tax.
• Company and Corporation Tax.
• Companies House Confirmation Statements.
• Companies House Annual Accounts Submissions.
• Landlords Tax.