Management accounts are the monthly version of your year-end accounts, prepared for you rather than for HMRC. Done well, they’re the most useful document in the business. Done badly, they’re a pile of numbers that arrives too late to act on.
1. Did we make money this month, and why?
Not just the profit figure, but what drove it. Which sales were up or down, which costs moved, and whether anything unusual happened that won’t repeat.
2. Which parts of the business make money?
Profit by product, service, client, job or site. This is often where the biggest surprises are: the busiest line isn’t always the most profitable one.
3. Where is cash heading?
Profit and cash are different things. Good management accounts sit alongside a cash forecast, so you can see a tight month coming weeks before it arrives.
4. How are we doing against the plan?
Actual numbers compared with your budget or forecast, so you can see whether you’re on track and change course early if you’re not.
5. What needs my attention?
The most valuable part isn’t a table at all. It’s a short commentary in plain English: what changed, what it means, and the two or three things worth doing something about.
If yours don’t do this
- Agree a month-end timetable with your bookkeeper
- Pick a handful of KPIs that actually matter to your business
- Add a short written commentary every month
- Review them with someone who can explain what they mean
ICAEW chartered accountant and part-time finance director for founder-led UK companies.
This article is general information, not advice for your specific situation.
