Management
Accounts
“the real value of accounting cannot be understood without Management Accounts that explain the story behind the business”. Jahan Aslam
What Are Management
Accounts And Why Do
I Need Them?
Management Accounts are “a set of tailor-made and standard financial reports” that help business management make key decisions and provide a clear insight into the business situation.
Unlike Statutory Accounts that are mandatory requirements set by HMRC and Government and are prepared after the year end, Management Accounts are focused on your business requirements. So, the business can decide the level of detail, the frequency, the layout and the accounting period you wish to analyse.
Management accounts can play a vital role in growth planning, for instance if you needed a loan, such reports would help provide Banks with insights on how your monthly financial situation has been. It, therefore, acts as a token of guarantee and assurance that you hold a strong financial standing, resulting in winning you the loan.
Moreover, you can have a better understanding of whether your strategies and plans were according to the budget or not. Additionally, you can share the numbers with your team in order to boost their confidence in your plans as well. Having a monthly overview of the numbers with everyone onboard can help a lot in moving forward or cutting down on your plans.
Last but not least, you won't find yourself lost in the confusion of finding where things went south. Reviewing these reports monthly will help you stay on top of your financials. As a result, by the end of the year, it won't be difficult for you to figure out what things went wrong and what worked out.
As you can see this can be a powerful tool for any business when done correctly and can really make the difference in growing your business through identifying, opportunities, trends, weaknesses and risks associated with difference operations of the business.
What Goes In Management
Reporting Packs
In simple, the idea is to include all that is relevant information required by management and decision makers to make an informed decision. 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 of time. It would typically show summary of Income received and types of expenses incurred.
However, every business is unique, a retail business for example 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 granularity required, the frequency and the layout.
A Balance Sheet shows the financial position of a business at any given point in time. A Balance Sheets 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 and better plan for cashflow.
Depending on your industry, nature of business, the management should work with the accountant to determine key performance indicators for the business. These should then be benchmarked against the industry norm and regularly reviewed to see the health of the business.
Aged Debtors report is a summary of all the business debtors (i.e the people who owe you money). It shows, how much is owed and for how long the money has been owed. Probably one of the most important everyday reports to help businesses with its cashflow and to reduce its bad debts risks.
Aged Creditors report is similar to Aged Debtors, but instead the report shows summary of creditors (i.e the people who you owe money to). When effectively managed, this report helps businesses determine how much and when to pay its suppliers.
Looking For A Bespoke
Management Reporting
for your business?
Speak to one of our Specialist!
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
Customer service is at the core of our business values, that’s why all our Management accountants are fully qualified with years of experience in helping small businesses. We believe a good management accountant shouldn’t just provide reports requested by the you, but also recommend what they believe would be useful for the business and bring value by improving the business informative tools.
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
Stat-Up Stage
If your business is in the start-up stage without a significant turning point, a simple and basic set of reporting would be enough. Since there is not much data to evaluate at hand, analysing and comparing the following will do the job for you:
- Summary of accounts
- Profit and Loss
- Balance Sheet
Covering these things will give you insights about the basics of your business. This will help you make better business decisions based on your financial standing. As a result, you will move towards growth 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
If you start up works out fine, the business will develop. This development will lead to the business requiring you to make investments. As a result, you will find yourself in several difficult situations, one of which could be to collect the funds. This is where management accounts kick in. You would have to assess your payables and receivables in order to have a better understanding of the money you need to pay out and receive.
At this stage, the reporting need to move from the basics to a bit complex. You 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. The detail in this stage is also more specific and complex. The following things 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
