What are Monthly Management Accounts?

Most companies face financial blind spots, which render it challenging to monitor profitability, manage cash flow, and make effective decisions. In the absence of a formalized system, key financial information may fall between the cracks, resulting in expensive mistakes and lost growth potential. Monthly management accounts offer a methodical means of keeping tabs on financial well-being, helping businesses remain ahead of their performance, recognize trends, and take active measures toward sustainable success.

What are Monthly Management Accounts?

Monthly management accounts are a great way to gain an overview of the financial health of your company. Whilst it might seem like a tedious, unnecessarily frequent activity, monthly management accounts hold huge benefits for you and your company. 

The information presented in monthly management accounts helps managers and the decision-makers in a business to make good, data-driven decisions, which pose fewer risks than going ahead without such information.

Management reports also help companies plan for the future based on real information. This sets a company up for realistic, sustainable growth.

What’s more, monthly management accounts also detect any areas of concern that, if left unchecked, could have a larger impact on the business. However, when identified in a monthly management report, actions can be taken to resolve the issue and reduce its impact. 

Benefits of Monthly Management Accounts

1. Better Decision-Making

• Helps in making informed business decisions with reduced risk.
• Provides a clear financial picture before making critical choices.

2. Future Planning

• Assists in budgeting, forecasting, and seeking investment.
• Provides valuable insights for operational planning.

3. Cost Control

• Offers visibility into income and expenses.
• Ensures efficient allocation of financial resources.

4. Stronger Year-End Position

• Keeps financial records up to date, avoiding last-minute surprises.
• Helps in tax planning and regulatory compliance.

READ RELATED ARTICLE: How does a cash flow forecast help a business?

Monthly Management Accounts Checklist

Having a Monthly Management Accounts Checklist integrated into your operations can significantly improve your business’s financial management and strategic planning. Below is a complete checklist covering the critical aspects of monthly management accounts:

1. Account Reconciliation

• Compare bank and credit card statements to internal records for accuracy and identify discrepancies.

2. Record and Categorize Transactions

• Accurately record all revenues and expenses, classifying them properly to allow detailed financial analysis.

3. Preparation of Profit and Loss Statement

• Prepare a profit and loss statement to assess monthly performance, comparing figures to budgets and past periods to identify variances.

4. Cash Flow Analysis

• Analyze cash inflows and outflows to ensure a healthy cash position, allowing the business to cover obligations and budget for future expenses.

5. Review of Balance Sheet

• Assess assets, liabilities, and equity to gain insight into the company’s financial health and make informed resource utilization decisions.

6. Assessment of Key Performance Indicators (KPIs)

• Review KPIs specific to your business to monitor operational effectiveness and progress toward strategic objectives.

7. Review of Tax Obligations

• Ensure all tax liabilities are accurately calculated and scheduled for payment to maintain compliance and avoid penalties.

8. Document Revisions

• Update financial documents and records with the latest information to keep them audit-ready and support well-informed decision-making.

9. Review by Management and Action Planning

• Conduct a comprehensive review of the management accounts with key stakeholders, presenting findings and creating action plans to address challenges and capitalize on opportunities.

By consistently implementing this Monthly Management Accounts Checklist, businesses can establish a structured approach to financial management, leading to improved decision-making and long-term strategic growth.

What are Examples of Monthly Management Accounts?

Monthly Management Accounting can cover a wide range of financial information, including:

• Cash flow analysis
• Product costing and valuation
• Inventory turnover analysis
• Constraint analysis
• Financial leverage metrics
• Accounts receivable and accounts payable management
• Budgeting
• Trend analysis
• Forecasting

Saurabh and his team have been super helpful with my 23/24 Tax return. Always quick to reply to my many questions and to give advice (on both email and phone) which made things much easier.

Orchard Films

What is the Purpose of Monthly Management Accounting?

The purpose of monthly management accounting is to assist the management of a business across its functions (planning, organising, directing, controlling), with accurate, useful financial information that helps these functions to perform efficiently. 

Control Over Costs

Management accounting helps you to gain an accurate picture of both income and outgoings, helping you to make more informed decisions about where the company’s money is going, and whether or not it’s worthwhile.

Planning

Robust, regular management accounts can be useful for a number of planning scenarios, including seeking investment and funding. Banks and investors will want to see an accurate financial overview of your business before deciding to get involved. 

In terms of internal planning, your monthly management accounts can also help with budgeting and forecasting for the upcoming period. What’s more, management reports can also be used as evidence when presenting ideas to decision-makers, and for reference when planning operational activities.

Decision Making

If you’re in a position to have to make important decisions which could have a huge impact on the business, you’ll need an accurate, recent snapshot of your financial landscape before making any decisions. 

The financial landscape of the business can often be the deciding factor in decision making, and for good reason – the last thing you want to do is make a decision that will have a negative impact on the business when your finances are already looking sour.

Stronger Year-End Position

A great benefit of monthly management accounts is that you’ll be in a stronger position for year-end accounting as you’ve been keeping on top of your finances throughout the year. 

You’ll never end up in a position where you receive a nasty surprise at year-end, wondering where things went wrong, nor will you end up celebrating an unexpectedly good year, whilst simultaneously worrying about extra taxes.

READ RELATED ARTICLE: What is the importance of business forecasting?

Who Prepares Monthly Management Accounts?

Monthly management accounts are typically prepared for business owners, CEOs, CFOs, decision-makers, directors, and other senior management within a business. 

There is no set rule on who can and cannot use management reports (except, perhaps, in cases where businesses restrict access to documents for those who don’t reasonably need to access them), but it is typically higher-level decision-makers, and those within the finance department, that will make use of such information.

What Should be Included in a Monthly Management  Report?

To make your monthly management report look professional and official, ensure to include a branded cover page, a summary of high value company strategies, mission statement and values, and a table of contents for easy navigation.

Moving on to the guts of the report, you should begin by looking at strategic goals and objectives, including key drivers, your definition of success, and other relevant data analysis questions. 

You should also include data for your company’s KPIs. When deciding what information to include here, consider what the readers of the report need to know to make decisions and to plan for the future. In this section, it’s a good idea to present the information, and what it means, as clearly as possible with easy-to-read graphs and charts, and summaries where you feel it is appropriate.

Make sure that the most important information and your company’s most important KPIs are easy to find and easily understood. 

Monthly Management Accounting in Southend

ARB Accountants provide monthly/quarterly management accounting to help you review your business’ performance, and help you to understand how your business can run more efficiently.

Our team of chartered accountants in Southend will put together your monthly or quarterly management report based on the individual requirements of your business, and will help you to better understand your financial landscape so that you’re in a good position for making sustainable business decisions. . 

Get in touch with us today to learn more about our management accounting service.

Frequently Asked Questions