Top Tips for Preparing Monthly Management Accounts

We recently covered the question: "what are monthly management accounts and why do you need them?" Now we'd like to spend a little time explaining what monthly management accounts should contain and how to put them together. Management accounts give a snapshot of your business finances and are designed to help the management team make decisions and take action. They are usually prepared monthly or quarterly and for a typical business they will contain:

• A cashflow statement
• A balance sheet
• A profit and loss statement (or income vs expenditure statement).
   

The information management accounts contain can help:

• Control costs because you can see where money is going
• Improve margins because you can spot areas for improvement
• Boost cashflow because you can see when money comes in and out of your business
• Reduce risk because you can spot patterns and take preventive action.
   

Research suggests less than half of SMBs prepare management accounts, but they can be invaluable. ACCA (the Association of Chartered Certified Accountants), the global body for professional accountants, says they’re a vital element of a thriving business: “The combination of formal business planning, regular management reporting and the use of financially trained staff is a prerequisite to a mode of rapid growth that does not jeopardise the survival and longevity of the business.”
 

If you’re taking the time to prepare management accounts, you need to think about how to maximise the value your work can bring to the business. With that in mind, here are three ways you can add more value to your quarterly or monthly management accounts.
 

Include Comparisons to Make It Easier to Track Trends

Management accounts are a snapshot but the numbers will make most sense when they are in context. For this reason, include relevant comparisons. When you include the previous month’s data, big changes stand out and you can assess whether action is needed. If your industry has a quarterly cycle, it will make sense to include the equivalent month from the previous quarter. If it’s an annual cycle, a year-on-year comparison will be useful.

These comparisons will be especially useful if you set key performance indicators (KPIs) in the business. For example, if you want to increase gross margin you’ll be able to check your progress against your target.
 

Include More Detail If You’re in Growth Mode

Management accounts are unique to every business, so a sample of the management accounts format of one business is likely to look different to a sample of the management accounts format of another business.

For example, if you’re in growth mode, it might be helpful to have more detail in specific areas to make it easier to spot any issues that could derail progress. Information such as payables, receivables and budget statements can help give you the insight you need. Or you might like to drill down into individual departments to see how performance differs to help you take targeted action.

Make the Information as Accessible as Possible

You don’t want your hard work to go to waste. As a finance expert, when you look at a spreadsheet of figures, you’ll find it very easy to analyse it. This may not necessarily be true for non-finance people. As well as including the spreadsheets, consider providing visual representations such as pie charts or graphs. This will make it much easier for non-finance experts to see what’s working well and where there are areas for improvement.
 

Pulling Together the Information for Management Accounts

With modern finance tools, pulling together the information required for management accounts needn’t be time-consuming.
 

Trusted solutions such as Concur Expense, Concur Travel and Concur Invoice automate and connect your finance processes end to end and eliminate manual data entry. This means the spend data you need is available more quickly and, perhaps more importantly, you free up valuable time – time you can spend pulling together strategic information such as management accounts that support the business as it moves forward.
 

To see Concur Expense and Concur Invoice in action, see our self-guided Expense and Invoice demo.