Use Management Accounts to Grow Your Business

Many small business owners rely on year-end accounts to review their financial health but by then it is usually too late to change course. If you want to steer your business, not just review it, then management accounts could be one of your biggest tools.

This article will help explain what management accounts are, why they matter, and how your business can use them to improve profitability, cashflow, and decision-making.

Management accounts can help to steer your business

What are management accounts?

Management accounts are financial reports produced monthly or quarterly that go beyond basic bookkeeping. They typically include:

• Profit and loss reports

• Cashflow statements

• Balance sheets

• KPIs tailored to your business

Unlike statutory accounts, management accounts are not for HMRC - they are for you.

Why they matter?

Small businesses continue to face tighter margins, rising costs, and greater economic uncertainty. Small business owners can't afford to wait 12 months to find out what went wrong.

With management accounts, you can:

• Spot cashflow issues early before they become a crisis

• Track trends month-to-month and compare performance

• Make data-driven decisions on hiring, pricing, stock, etc

• Provide clear financials to investors or lenders if needed

Local example: a retailer in Lancashire

An independent clothing retailer based in Lancashire was worried about declining sales. By introducing monthly management accounts they could track:

• Sales by product category

• Return rates

• Average transaction value

This helped give them the information they needed to stop over-ordering unpopular stock and refocus their marketing on higher-margin lines. Within 3 months, profitability increased 18%.

How can management accounts improve your business?

What should be in your management accounts?

Management accounts should be tailored to each business, but some common inclusions include:

Section	What It Shows	Why It Matters
P&L Statement	Monthly income vs expenses	Are you profitable — and why?
Cash Flow Forecast	Inflows and outflows	Will you run out of cash soon?
Debtors & Creditors	Who owes you / who you owe	Manage collections and payments
KPIs	E.g. revenue per customer	Track performance & efficiency

Common mistakes producing management accounts

Management accounts are a powerful tool - but only if they are done right. Here is a quick list of the most common mistakes, why they matter, and how to avoid them:

Mistake	Why It’s a Problem	How to Avoid It
1. Not preparing them frequently enough	Outdated information leads to poor decisions.	Prepare reports monthly or quarterly.
2. Including too much or irrelevant data	Important insights get lost or ignored.	Focus on a few key, actionable metrics.
3. No link to business goals	Reports don’t help drive growth or efficiency.	Align KPIs with your specific goals.
4. Not understanding the figures	Missed opportunities or warning signs.	Ask your accountant for explanations and summaries.
5. Ignoring cash flow	Profit looks fine, but the business runs out of money.	Always include a cash flow forecast.
6. Poor bookkeeping	Inaccurate data = bad decisions.	Keep records clean, current, and reconciled.
7. No comparison with budget or forecast	No context for evaluating performance.	Use a budget or forecast as a benchmark.
8. Doing it just to ‘tick a box’	Reports are unused, wasting time and money.	Review regularly and take action on insights.

How Verifiable Accounts can help

If you'd like to see how management accounts could help your business, contact us for free to find out how we help our clients:

• Set up and customise their management accounts

• Understand what the numbers mean

• Use the information to make better decisions

Points to note:

The quality of your management accounts will always be based on the quality of information used to create them. We recommend enabling bank feeds and performing regular bank reconciliations to improve the quality of your financial data.

This document is a simplified helpsheet and careful research should be completed if you are unsure.

Need more information? Contact us today for tailored help and advice.

Verifiable Accounts - qualified accountants providing accounting, bookkeeping, tax and business advisory services.