Management accounts are financial reports used internally by a company’s management team to track performance and make decisions.
Unlike statutory accounts, which are for external use and legal compliance, management accounts are more detailed, timely, and tailored to the specific needs of the business. They provide insights into profitability, cash flow, and other key financial aspects.
Internal Use:
• Management accounts are designed for the use of internal management, not for legal or regulatory purposes.
• Detailed and Timely:
• They provide a more granular view of financial performance than statutory accounts and are often prepared monthly or quarterly.
• Tailored to Business Needs:
• The format and content of management accounts can be customized to reflect the specific needs of the business and its management team.
• Decision Support:
• They help management make informed decisions about resource allocation, pricing, and other strategic issues.
• Performance Monitoring:
• Management accounts allow management to monitor performance against budgets and forecasts, identify areas for improvement, and take corrective action.
• Not Mandatory:
• Unlike statutory accounts, management accounts are not required by law, but they are often considered a valuable tool for effective management.
• Profit and Loss(Income Statement) Shows sales, cost of sales , and profits over a period of time.
• Balance Sheet (Statement of Financial Position): Shows what the company owns (assets), owes (liabilities), and the owners’ equity.
• Cash Flow Statement: Tracks the movement of cash in and out of the business.
• Budget vs. Actual: Compares actual performance against the planned budget.
• Variance Analysis: Explains why actual results differ from the budget.
• Other Reports: Depending on the business, other reports may be included, such as production costs, customer profitability, or segment performance
If you are looking secure funding Management Accounts are a useful tool to assist with this. Some banks may insist on these being completed monthly or quarterly as a condition of funding.