Management accounts are a useful tool for businesses who want to monitor financial performance. One of the beautiful things about using bookkeeping software is how much easier it makes producing them!
We explain what management accounts are, what they’re used for, and how to use Pandle’s Reports feature to keep an eye on how well your business is doing.
What is the purpose of management accounts?
Management accounts are a set of financial reports which give an overview of how your business is performing. They’re a useful resource to refer to before making any business decisions which might affect your financial position, or they can act as a trigger to take action.
For instance, if you review your business costs and realise you’re not making enough profit, that’s an area that needs further attention. Simply checking that there’s enough money in the bank to pay the next bill won’t give you the same level of insight or control.
Why should I review management accounts regularly?
Waiting until the end-of-year report to see how the business is performing (or not performing) is pretty risky. You see, reasonably easy-to-solve issues can sometimes be compounded by ongoing activity. You could be left with a much bigger problem to sort out once your year-end statement lands.
Produce monthly management accounts though, and you’re getting to that moment of enlightenment much earlier.
What should be included in a set of management accounts?
Management accounts basically consist a profit and loss report, and a balance sheet report. Depending on the needs of your business, you might find it useful to include other reports too, such as a cash flow report.
Monitoring Key Performance Indicators, such as paying bills or getting paid on time, can also give you an idea of how healthy the business really is, so these might form part of your monthly monitoring too. And obviously, because Pandle is all about simple bookkeeping efficiency, we’ve got a Data Exports tool for that!
