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A Guide on What to Include in Management Accounts – Nigel B

If you run a business or handle finances for a company, you are likely aware of the importance of management accounts.

Management accounts provide detailed financial information about a company’s performance and give you a clear picture of your organisation’s financial health. They can be used to keep track of progress, decide where resources should be allocated and assess profitability.

But what are the specific contents of these accounts? This guide explains what you should include in your management accounts to ensure your business runs smoothly.

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What Are Management Accounts?

Management accounts are financial reports produced for owners and managers of businesses. Business owners and managers typically use management accounts to make strategic decisions. You can use them to understand and plan for your performance beyond the numbers.

Similar to year-end accounts, management reports take a less formal approach and can be tailored to the user’s needs.

Many companies use management accounts to obtain the most value from their financial statements. This type of financial report isn’t compulsory. But management accounts are invaluable tools in bookkeeping and accounting since, with them, you can accurately assess your performance and correct course more quickly. Moreover, there are no standards or ‘correct’ ways to do them. For this reason, management accounts are unique to each business. It is possible to find good practices and popular suggestions for what to include, but ultimately, what information you and your accountancy manager value will determine the final report structure.

Purpose of Management Accounting

Financial reporting has several key objectives, such as identifying areas for improvement and where profitability can be improved. Management accounts provide information about how each part of the business has performed and assist in making decisions to improve performance going forward.

Management accounts enforce financial discipline and expose bad practices. It can help business owners monitor overhead costs, keep stock levels in check, track working capital and analyse KPIs to see what’s going on in the business.

Management accounts are also useful for identifying your key customers and determining the most profitable ones. You can use this information to increase sales, boost turnover and maximise profits.

It’s important to note that management accounts are essential for your business, but you need the right ones. Accounting packages can be found on the market, or you may already have one but need help using it to its full potential. A reliable account manager or an expert in account bookkeeping can help you in such instances.

What Should Be Included in Management Accounts?

A management account should include information based on the business’s lifecycle stage, its sector and the company’s goals.

Here are some suggestions for what information to include. With time, your choices of what to include can evolve, allowing you to develop the most useful approach.

Cover sheet

Here, you‘ll find information about the business, the period covered by the accounts, as well as a confidentiality disclaimer.

Executive summary

After the cover sheet, an executive summary should follow. Highlights of the month, such as profit margins, turnover ratios and losses incurred, can be outlined here.

Each department in your business should have its own highlights to help you identify which areas are performing well and which contribute to losses.


Businesses have KPIs that measure what they want to accomplish within a specified period. KPIs can be financial targets, such as revenue growth, profit margins, operating cash flow or the turnover of inventory. In addition, KPIs can be performance-based.

Take a look at your financial statements and compare your KPIs to them. Are you meeting your revenue goals based on your income statement? Take a look at where you are doing well and where you can improve.

Profit and loss statement

Expenses, revenues and costs are detailed here. All of this information is essential to managers in understanding the company’s current financial condition. As a result, they can answer questions like: How are things going financially? Is our performance in line with our budget? What is the difference between our current financial position and last year’s?

The profit and loss statement provides accurate forecasts for monthly, quarterly and annual business performance. Knowing which departments generate revenue is also helpful, allowing owners to invest more in these departments and reduce expenses where necessary.

Cash position

Cash flow is your business’s lifeblood, and understanding it is crucial for budgeting, investing and funding. Cash flow problems can cause even a profitable company to fail. Making informed decisions about budgets, investments and borrowing will be easier if you have visibility into your cash position.

In your management account, you identify patterns based on the data in your cash flow statement. You can uncover patterns such as: When do clients typically pay? What are the most expensive areas of the business?

By understanding these patterns, you will be able to predict the future more accurately by allocating money according to each month’s earnings.

Balance sheet

One of the most important financial statements is the balance sheet. It provides an accurate picture of a company’s financial standing. Assets, liabilities and equity are usually shown on a balance sheet.

How Often Should Management Accounts Be Prepared?

A management account is usually prepared regularly by business owners or managers to maximise the effectiveness of monitoring. No set rule applies, but they are typically produced monthly or quarterly.

Who Should Prepare Management Accounts?

Hire an accountant or speak to your current one if you need assistance preparing your management accounts. Your management accounts can be handled by a qualified accountant, as they have an understanding of numbers. Their expertise will help you analyse your financial statements and identify trends, patterns or red flags that can help you make informed decisions.

However, you should also be involved in developing the management report because you know your business best. Your KPIs should be shared with your accountant, who will be able to analyse and forecast based on these figures.

Let Our Team Help You

You do not need to struggle with bookkeeping and accounting services or file tax returns if you hire our experts. Our team has extensive experience collecting data and preparing management reports. If your company needs accurate, informative reports, we can develop a system that works for you. You can concentrate on running your business, and we’ll handle everything. Contact us today.

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