Monthly Management Accounts
Most businesses now operate in a dynamic environment, hence the reason why out-of-date financial reporting has little use in any progressive organisation.
Business leaders need to know what’s going to happen next, not what happened last year.
The interpretation of the story behind your accounting figures is as important as the figures themselves. Recognising the patterns and trends which are emerging will help you understand their impact on future performance.
Management accounting is nothing new. Over the past couple of centuries the entrepreneur or owner/manager has found it more necessary to keep accounts to inform himself on all matters concerning the internal operations of the business – assets balance, liquidity, profitability etc., than for the benefit of outside parties. The purpose of management accounts is to assist in planning, decision-making and control.
What is the difference between financial accounts and management accounts?
Management Accountants
Produced for internal users – directors, managers, or other connected stakeholders.
Can be covering any period of time (though usually 1 month)
Present historical information, i.e. last month’s Profit & Loss, but can include forward looking information, i.e. cash-flow forecasts, budgets etc.
No legal requirement
No pre-determined format – can be designed to suit the needs and KPIs of the business
Can focus on specific areas of business with drill down detail.
Focus on performance
Financial Accountants
Produced for external users, i.e. HMRC, Companies House, etc.
Reporting on performance over a specific period (usually 1 year)
Usually presenting a historic perspective
Required by law (Companies Act 1989) for incorporated businesses
Statutory defined, standard format, to assist comparability and transparency
Financial information usually in summary format
Focus on financial information
Identify, generate, present, and interpret the information provided to:
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Inform strategic decisions and formulate business strategy |
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Plan for the long, medium and short term |
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Determine optimum capital structure and how best to fund that structure |
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Inform operational decisions |
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Control those operations and ensure efficient use of resources |
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Safeguard the assets of the company. |
