We would recommend that small & medium sized businesses maintain a set of management accounts, updated at least on a quarterly basis, but ideally on a monthly basis. This allows for an analysis & assessment of the performance of the business. By having a set of management accounts completed the business manager can verify that the business is moving in the right direction. If the management accounts reveal a deviation from the financial plan (budget), then action can be taken to address the issue.
Key Benefits of Management Accounts
- Gives regular visibility how the business is performing versus plan (financial budget).
- Through variance analysis, directs business managers to focus on key business areas.
- The management accounting process triggers a planning cycle that produces the annual financial budget.