Management
Accounts
“The real value of accounting cannot be understood without Management Accounts which unlocks the story behind your business” Jahan Aslam
What are management
accounts and why do
I need them?
Management Accounts are a set of tailor-made or standard financial information which are produced on a monthly or quarterly basis to help you monitor your business’s performance.
Unlike Statutory Accounts, that are a mandatory requirement set by HMRC and Government and are prepared after the year end, Management Accounts focus on your business requirements.
They act as a financial report used by business owners and management to provide an insight into the financial health of their business by tracking key performance indicators and for day-to-day and strategic decision making. They are usually produced on a regular monthly, or quarterly basis.
They can also play a vital role in growth planning. If, for example, you need a loan, such reports would provide Banks with valuable insights on key financial data which could act as a guarantee and assurance that you have a strong financial standing, therefore resulting in you winning the loan.
Management accounts are key to running and monitoring your small business or organisation and highlight a number of key indicators regarding performance, and whether you are achieving your goals within the required timeframes.
You can access:
- Staff and management performance
- Which customers are providing you with the most business?
- Cashflow & billing
- Pinpointing your business’s ‘star performers’ and which are under performing.
In summary, this can be a powerful tool to help you run your small business to its full potential and determine your business successes and where you may need to make financial decisions or improvements.
Looking for a bespoke
management reporting
for your business?
Speak to one of our specialist!
Using Xero for your
management accountants
As well as helping you run your business finances on a day-to-day basis, Xero also provides a platform for making critical business decisions - holding the data and reports you need to produce regular management accounts.
If you think using Xero Accounting software would benefit your business, please do contact us & we will be glad to help.
What goes in management
reporting packs
Make sure you include all the essential information required by the company’s key decision makers or management to make informed decisions. Although some large organisations can have huge sets of reports, most management reporting packs will include the following;
Profit & Loss (P&L) shows the performance of a business in a given period. It would typically show a summary of Income received and types of expenses incurred.
Every business is unique so the reporting pack will differ from business to business.
A retailer with multiple stores may want to see Income & Expenses split by each store, whereas a construction business may want to see profitability of each project it undertakes.
P&L produced for management should therefore be tailor made keeping in mind the nature of business, the level of detail required, the frequency and the layout.
A Balance Sheet shows the financial position of a business at any given point in time and should be prepared with notes to help indicate key business ratios, such as liquidity ratios, debtor days, inventory days etc to highlights areas of risk to help with advanced cashflow planning.
Depending on your industry, or nature of your business, we can work with the management team to determine key performance indicators. These will then be benchmarked against the industry and regularly reviewed to see the health of your company.
Aged Debtors report is a summary of all your business debtors (i.e. the people who owe you money). It shows how much is owed, and for how long the money has been outstanding. This is a vital report as it shows your cash flow and how to reduce any bad debts risks.
Aged Creditors report provides a summary of creditors (i.e. the people who you owe money to). When effectively managed, this can provide essential financial information to help you determine how much and when to pay your suppliers.
Difference between management accounts
and financial statutory accounts
| Statutory accounts | Management accounts | |
|---|---|---|
| Aggregation | Consider the entire business | Consider the specifics of the business, such as the profits earned by a product |
| Efficiency | Consider the efficiency of the business as the report is about profitability | Take into account the specifics in order to help understand the root of the problem and find its solution. |
| Proven Information | Require precise records | Work on actual, estimates and approximation |
| Reporting Focus | Reports for within and outside the company focused on finances | Reports mainly for within the company focused on operations |
| Standards | Need to meet certain standards set by Companies House | Do not have to comply with any standards |
| Time | Take into account everything that the business has achieved | Have a future orientation |
Why choose us?
Qualified dedicated accountant
All our Management accountants are fully qualified and have a wealth of experience in helping small businesses.
Customer service is one of our key business values. We believe a good management accountant shouldn’t just provide reports requested by you, they will also formulate what to report on so you have everything you need to inform and help drive your future investment, cashflow and strategic decision making. We will also recommend what we believe would be useful for the business and bring value by improving the informative business tools.
If you have an accountancy or tax issue, please do talk it through with us on 020 8577 0200 as there is a good chance we have assisted with this issue before and will be able to help you.
Great Management Accounts can only be produced with Great Bookkeeping See our bookkeeping service
Tailor made reports
“One size doesn’t fit all” – It is important to plan and determine what information will be useful and what will be more hassle than its worth. Our accountant will work closely with you to identify your business requirements and develop an effective reporting plan. We can provide monthly or quarterly reports.
Great Management Accounts can only be produced with Great Bookkeeping See our bookkeeping service
Forward thinking
A profitable business requires more than traditional accounting”. We are modern accountants who take pride in being one of the leading accounting firms in UK when it comes to business process automation and systems integrations. We believe this knowledge plays a vital role in helping businesses develop better reporting.
Great Management Accounts can only be produced with Great Bookkeeping See our bookkeeping service
We support your business
at each growth stage
Start-up stage
If your business is in ‘early shoots’ or start-up stage, a simple and basic set of reporting would be enough as there probably isn’t much data to evaluate at this stage, analysing and comparing the following will do the job for you:
- Summary of accounts
- Profit and Loss
- Balance Sheet
Covering these areas will give you a good insight into the basics of your business so you can make informed decisions based on your current financial standing. As a result, you will be able to move towards growth much faster. Moreover, when it is time for you to make a big investment, you can change the indicators to be covered in the reporting pack.
Growing stage
As your business grows and develops this will lead to considering making investments. As a result, you will need to be much aware of your cashflow, which is where management accounts can assist you. You would have to assess your income and outgoing expenditure to have a better understanding of the money you need to pay out and receive.
The reporting may need to move onto the next stage as you will need to include factors that will enable you to have a better understanding of the money being spent. The following will do the job at this stage:
- Payables
- Receivables
- Budget
- Cashflow
Mature stage
This is the stage where you need to include more detail which is more specific and complex. The following areas must be included:
- Key Performance Indicators (KPIs)
- Shareholders Loans Transactions
- Accruals and prepayments
- Segmental/departmental analysis
- Profit & Loss actual vs. last year and/or forecast
