Businesses need a range of information to know how they are doing financially, in terms of profitability and cash flow. These range from Key Performance Indicators (KPI’s), which may just consist of level of sales, number of new customers or simply the money in the bank account, to full year end accounts (which are statutory accounts for limited companies). Bridging the gap between KPI’s and the year end accounts are management accounts.
Management accounts will be for a specific period (monthly, quarterly or half yearly) and will summarise the trading position of the business, usually focussing on the profit and loss account. They are not required by law, but are a useful tool to gauge how well the business is doing against either budget, forecast or compared with the previous year.
Given that management accounts are completely discretionary, they aren’t subject to the same constraints which apply to the annual accounts, as they aren’t used to calculate tax liabilities or subject to accounting standards. Therefore, it is completely up to the business owner how often (and whether) they produce management accounts.
As part of our range of services we provide, we produce management accounts for clients. We can produce them on a regular basis, or ad hoc as and when required. If it is something you are interested in looking at, please do not hesitate to get in touch.