How to Prepare Management Accounts

Providing Independent Financial Advice In Lancashire

Understanding Management Accounts

Using a daily profit & loss statement to make decisions about your company future doesn’t give you a clear enough picture. Your year-end accounts are more than detailed enough, but eleven months out of twelve they’re at least somewhat out of date. Having accurate and clear quarterly or monthly management accounts is the solution to that issue. So how do you prepare them?

With decades spent providing accountancy services to Lancaster & Morecambe businesses, we feel qualified to answer that question.

Providing Independent Financial Advice In Lancashire

Prepare Your Financial Statements

Your management reports will include a balance sheet, cash flow statement, and a profit & loss statement. Your P&L shows revenue and expenses at a glance, your cash flow statement gives you an understanding of your liquid assets, and your balance sheet sums up your assets and liabilities.

Together these three documents give you a clear financial overview of the business. However, many management reports include additional statements that allow you to easily assess specific parts of the business. For example, a business with three brick-and-mortar shops and an online store might have custom reports showing the performance of each of these revenue streams. An agency working on multiple major projects might have a report for each project.

These are great for identifying standout and problem areas.