Angus Brewer Consulting Partner

Unlocking the power of Management Accounts to grow and improve your business.

Snapshot Summary

Management accounts are internal financial reports, typically produced monthly, that give business owners clear, up-to-date insights to support smarter decisions and drive growth. While not mandatory, they are crucial for managing cashflow, spotting trends early, and tracking performance against goals. Timely and accurate management accounts turn financial data into actionable insights that help improve efficiency, profitability, and long-term success.

 

What are management accounts? Management accounts are financial reports prepared for business owners and managers, typically on a monthly or quarterly basis, although we do strongly recommend producing them monthly. These reports should include key documents like a profit and loss report, budget reporting, balance sheet, ratio analysis and cashflow statement. While they share similarities with year-end accounts, management accounts are less formal and can be tailored to meet the specific needs of the user. Their main purpose is to give you greater control over your finances and help drive business growth.

They’re called management accounts because they’re primarily used by business owners and leadership teams to provide regular up-to-date insights into business performance, to support strategic decision-making that will improve efficiency, profitability, and financial success. Management accounts are not mandatory, they don’t have to be filed with HRMC and are only used internally. When producing Management accounts, your company does not have to follow GAAP guidelines (or FRS102), however, the accounting principles still remain in relation to these standards. You can choose exactly what you want to segment, therefore it provides a more specific focus on certain areas of the business, enabling you to hone in on the details and really analyse the key drivers of your business.

What are the benefits of management accounts and why are they important? Management accounts are essential for any business looking to stay in control and boost their growth. With accurate and timely data, business owners can manage cashflow more effectively, identify trends early, and take action before issues escalate. Management accounts also help pinpoint areas of overspending or inefficiency, making it easier to control costs and improve performance. By tracking progress against budgets and targets, they ensure the business stays aligned with its goals. Additionally, having clear and current financial reports are essential for investors and lenders, showing that the business is well-managed and financially transparent. 

What makes an effective set of management accounts? Management accounts are bespoke to your business, and over time you may change what you include in order to formulate the most useful approach for you and your business. It is essential that management accounts are accurate, so that business owners and leadership teams can evaluate a company’s result at any given time. There isn’t a strict statutory checklist of what management accounts should include, but based on our experience, below are some key points we recommend in order to create an effective set of management accounts: 

  • You need to have clear budgets to compare actual performance against, and variances measured for each period – both for the month/quarter, and year to date.  Regular variance reporting and analysis provides invaluable insights into the business performance and factors that impact this.
  • It is essential that you report an accurate and true Gross Profit – ensuring that all costs and sales are reported in the correct period, and that the right costs are reported in COGS. Find out more on how to report realistically. 
  • If you’re getting monthly fluctuations in Gross Profit, there could be several reasons behind this, this article includes some useful tips on Gross Profit fluctuations.
  • It is essential that management accounts include a full accurate balance sheet – this gives a picture of the real financial position of the company including liquidity and liability commitments. 
  • Cashflow statement – this provides a statement of where cash has been consumed or generated throughout the business in the period and a key document that helps management teams and directors understand where the profit generated differs from the net cash flow in the period, and how the drivers of cashflow can be manipulated to improve the business’ cash position.
  • Ratios are a powerful management tool to assess the performance and risk profile of your business.  Some key ratios to include are: Profitability, Liquidity and working capital drivers.
  • EBITDA – it is important that you have a clear view of your EBITDA.
  • As businesses grow, it can be important to boost your management reporting by including some further key ratios and key trend graphs as well as divisional or silo reporting. You could also include for example your top ten most profitable customers, or your worst performing product categories in revenue or profitability.
     

Why is it crucial that management accounts are timely? It is important that you get your management accounts done as soon as possible in the month. Don’t let perfection stand in the way of getting them on time, it is more important to get them done, perfection can come later. Once the management accounts are completed, we recommend having a meeting to discuss and make informed decisions and decide corrective actions.

How can you leverage management accounts to grow or improve your business? By regularly reviewing your management accounts and ensuring that you are producing them promptly at the start of each month, you can identify trends, and take actions to stay on track with your overall financial goals. For example, they can highlight underperforming sales strategy rising costs, or shifts in your business model and working capital drivers, enabling you to adapt your strategy quickly. They also help with cash flow management, and tracking key performance indicators (KPIs), all of which are essential for sustainable growth. In essence, management accounts turn numbers into actionable intelligence, giving business owners a proactive tool to steer their business toward improvement, growth and success.

If you’re not currently producing management accounts, we strongly recommend making them a regular part of your reporting. Understanding your numbers is key to running a successful business, and we’re here to help. Get in touch with us for a no-obligation conversation about how management accounts can benefit your business and how we could assist. 

Please note: This article is provided for information only and was correct as at the time of writing (24/04/25). Any lists and details provided above are not exhaustive and are not intended to be full and complete guidance.  No action should be taken without consulting detailed legislation or seeking independent professional advice. Therefore, no responsibility for loss occasioned by any person acting or refraining from action as a result of the material contained in this article can be accepted.