650NED


What should monthly management accounts include?


For many SMEs, year-end accounts are the only set of fi nancial reports they see. The trouble is, by the time those accounts arrive,


the information is six to nine months out of date. It’s like driving while only looking in the rear-view mirror. That’s why monthly management accounts are so


powerful. T ey give you timely, decision-ready informa- tion about how your business is really performing, not just whether HMRC will be happy at the year-end. But what should they include?


Profi t and loss (P&L) statement At the heart of any management pack is a clear P&L. Unlike statutory accounts, this should be structured around how you run the business and with meaningful categories for revenue, cost of sales and overheads. T ings to include: revenue split by product/service


line; gross profi t and margin trends; operating profi t after overheads; and comparison against budget/forecast and prior periods. T is isn’t just about reporting; it’s about spotting mar-


gin erosion, understanding which services are profi table, and taking action quickly.


Balance sheet Often overlooked, the balance sheet shows the health of the business at a point in time. Lenders, investors and potential buyers will scrutinise it closely. Useful highlights include:


■ Cash position and whether it’s increasing or decreasing month-to-month


■ Debtors and creditors - are customers paying on time and are suppliers being stretched?


■ Stock levels - is cash being tied up unnecessarily? ■ Net assets - what’s left if everything was sold and debts paid off


A clean, reconciled balance sheet reassures you that the numbers in the P&L are reliable.


Cashfl ow report Profi t is important, but cash keeps the lights on. A roll- ing 12-week cash-fl ow forecast should be included in monthly packs, so you can anticipate shortfalls and plan investment. T is should show: opening balance; expected infl ows


(customer receipts, funding); expected outfl ows (suppliers, payroll, tax/VAT, loan repayments); and closing balance With this, surprises become rare, and you have time to act before things become a problem.


To see how your monthly management accounts stack up, contact Annie T ompson at 650NED on 01908 909689, email hello@650ned.co.uk or visit www.650ned.co.uk


Annie


Thompson Director 650NED


KPI dashboard Numbers alone can be overwhelming. A simple dashboard of fi ve to 10 key performance indicators (KPIs) make the accounts instantly useful. Examples for SMEs include: gross margin percentage;


debtor days (how long customers take to pay); creditor days (how long you take to pay suppliers); net margin percentage; staff cost as percentage of sales; pipeline conversion rate; and recurring revenue percentage (if applicable). T e right KPIs depend on your sector, but they should


always link to what drives value in your business. The best management accounts don’t just dump


numbers; they explain them. A short commentary from your Finance Director (outsourced or in-house) should highlight what’s going well, what needs urgent attention, trends worth noting and recommended actions T is bridges the gap between data and decision making.


Why It matters Strong monthly management accounts mean you make confident decisions based on facts, not gut feel; spot problems early before they spiral; demonstrate fi nancial maturity to banks, investors and buyers; and sleep better knowing you’re in control. Monthly management accounts aren’t a compliance


burden; they’re a tool for growth and control. At £1m-plus turnover, they shift from being ‘nice-to-have’ to ‘essential’. Done well, they’ll give you clarity, confidence and a stronger business.


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