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Monthly Management Accounts

Successful businesses prepare and digest monthly management accounts. The accounts allow the business to gauge performance and guide strategy. Having this information enables the management team to steer the company in the right direction.

The monthly management accounts includes the profit and loss statement and balance sheet statement. The profit and loss statements (or income statement) shows the financial performance of the business for the month.  Did it make a profit? The balance sheet shows the net value of assets of the business at the month end. What has the business got left for next month?

Monthly management accounts will also include other useful reports and assessments, such as :

  • Discussion of the main highlights and lowlights in the month
  • Turnover analysis by product and service
  • Gross margin analysis
  • Operating profit analysis
  • Aged debtor analysis and concerns about debtor balances
  • Aged inventory analysis
  • Aged creditor analysis
  • Cash analysis – cash burn/ cash generation rates; cash flow months remaining
  • Capex – capital expenditure analysis
  • KPIs review, such as sales-costs per head
  • P&L actual against forecast variance
  • Monthly trend analysis

Advantages of monthly management accounts

Advantages of producing and analysing monthly management accounts include:

  • Controlling costs.  Through identifying overcharges or costs that can be reduced
  • Raising finance.  Investors and banks will require up-to-date financial information
  • Tracking margins and performance
  • Managing cash flow
  • Monitoring working capital
  • Credit management

Simon Cook, Valuations, Forensic Accounting, Virtual CFO. CA Accredited Business Valuation expert, Chartered Accountant and Certified Fraud ExaminerSimon is a CA Accredited Business Valuation expert, Chartered Accountant and a Certified Fraud Examiner. Simon specialises in providing forensic accounting and valuation services. Prior to founding Lotus Amity, he was a Forensic Accounting partner with BDO Australia and led their National Forensics practice. He has worked as a forensic director for a major offshore forensic accounting practice which included assisting in multi-billion-dollar litigation in relation to giant Bernie Madoff Ponzi scheme. Simon provides valuation services in disputes, for raising finance, for restructuring, transactions and for tax purposes.

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