Monthly management accounts should help you understand what happened in the business and decide what needs attention. A report can be accurate yet difficult to use if it contains unexplained movements or arrives after the relevant decision has been made.
Start with the questions
Agree the questions your reporting should answer. Are sales keeping pace with the plan? Are particular costs increasing? Which customers owe money, and which payments are due soon?
Choose a small set of measures that reflects how your business operates. A consultancy may focus on work completed and invoicing, while a retailer may also need information about stock. Charity reporting may require a view of costs by project or department.
Read profit and cash together
A profit figure does not tell you how much cash is available for the next payment run. An unpaid sales invoice can appear in profit before the customer pays, while borrowing can increase the bank balance without representing sales.
Read the profit and loss account alongside the balance sheet, outstanding customer and supplier balances, and a cash forecast. Ask for significant differences to be explained in language your management team can use.
Explain the movements
Compare actual results with the budget and a relevant earlier period. Focus on material differences and their causes. A timing difference may need a different response from a sustained increase in a supplier’s price.
Check that the underlying records are ready for reporting. Missing invoices, unreconciled bank transactions or inconsistent cost allocations can make a movement look more meaningful than it is. Note estimates and incomplete information so readers understand the limits of the figures.
Finish with decisions
Add a short action list: the issue, the person responsible and the next review date. For example, agree who will follow up overdue invoices or confirm the cost of an upcoming project.
Review the reporting format periodically. Remove information nobody uses and add detail only when it supports a real decision.
KBA can discuss bookkeeping and accounting support for your organisation. Explore our accounting services and contact us with the questions you want your reports to answer.
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