03: Management accounts

Although producing management accounts – unlike financial accounts – is not compulsory by law, it is essential for any growing business. Indeed, it would be hard to run a successful company without them.

Management accounts help businesses to make timely and meaningful management decisions by identifying trends and highlighting areas of income and spending.

They analyse recent historical performance and usually include forward-looking information such as sales, cash flow and profit forecasts.

A cash flow forecast, for example, enables your company to predict rises and falls in its cash balance in the future and can help to determine what, if any, additional capital you need to raise, and by when.

Different companies will have different management accounting needs, depending upon which business areas are important to them, and there is no set format. But it is difficult to run a business without management accounts, and most companies produce them regularly (eg monthly or quarterly).