Monthly management accounts for a client
How a firm prepares monthly management accounts for a client from Achekam's books, what the books do not produce, and how to write commentary.
By Achekam · · 5 min read · For Accountants & audit firms in South Africa, Nigeria, Kenya
A restaurant owner does not want a trial balance. She wants to know whether last month was better than the one before, whether the new menu is paying for itself, how much cash will be left after the supplier run, and whether she can afford to replace the cold room this year. Management accounts are the firm's monthly answer to those questions, and when they arrive as an unexplained income statement, they answer none of them.
This article sets out how a firm keeping a client's books in Achekam can build a useful monthly pack: what the books produce directly, what they do not, and how to turn the figures into something the owner reads.
What owners want to see each month
Before deciding the format, ask the owner what decisions they make each month and what they need to make them. The answers usually fall into five questions:
- Did the business make a profit, and how does it compare with last month and with the plan?
- Where is the cash, and what is coming in and going out soon?
- Who owes the business money, and for how long?
- What does the business owe, and when is it due?
- Is anything unusual that the owner should know about?
Management accounting, as AccountingTools puts it in its definition of management accounting, is the internal reporting that tracks revenues, expenses, variances and other measures to help managers act. The test of a monthly pack is whether the owner acts on it.
The income statement and balance sheet from the books
Achekam's management accounts show an income statement for a period the firm chooses, beside the period before, and a balance sheet at the end of the period. Both are added up from the client's own journals, and both can be exported as PDF or CSV. The PDF suits the owner's pack; the CSV suits any analysis the firm adds in a spreadsheet.
The comparison with the previous period is useful for steady businesses. For seasonal ones it can mislead: a ski-hire shop's July compared with its June says little. For those clients, produce the same month of the previous year as well, by running the report for that period and setting the two side by side in the pack.
Where the owner asks about a particular account, the trial balance gives the detail. In Achekam it shows each account for all time, for a period or at a date, and says whether debits equal credits. A period trial balance answers "what went through repairs this month?" faster than scrolling the ledger.
Budgets complete the picture. A business can set a budget per account and per period and compare it with the actual figures from its ledger. If the client has a budget, the pack should report against it; how to build one is covered in setting a client's budget.
The year-to-date preset
The management accounts screen has a year-to-date preset. It starts on 1 January, not on the client's own financial year start. For a client whose year ends in December this is exactly right. For a client with a February year end, the preset gives a figure that mixes two financial years.
Set the year-to-date period by hand for every client whose year does not follow the calendar, and label it in the pack: "Year to date: March to August". An owner comparing year-to-date profit with an annual budget needs the two to cover the same months.
No cash flow statement from the books
Achekam's books do not produce a cash flow statement. For many owners, cash is the first thing they ask about, so the pack needs a cash section the firm builds itself.
For most small businesses, a simple cash summary is enough and is easy to prepare from the month's bank reconciliations:
| Line | Source |
|---|---|
| Opening cash in each bank account | Last month's reconciled balances |
| Receipts from customers | Bank statements, cross-checked to receivables |
| Payments to suppliers and staff | Bank statements, cross-checked to payables and payroll |
| Other movements: loans, tax, owner's drawings | Bank statements |
| Closing cash | This month's reconciled balances |
Add a short look ahead: known large payments due next month, such as VAT, payroll and a supplier run, against expected receipts. That one table often matters more to the owner than the rest of the pack.
Commentary that explains the numbers
The commentary is where the firm earns its fee. Keep it to a handful of points, each one a fact, a reason and, where relevant, a suggestion:
- "Sales were up on last month because of two large catering orders; neither is expected to repeat."
- "Food cost rose as a share of sales after the supplier's price increase; the new menu prices have not yet caught up."
- "Three customers are more than 60 days overdue; the largest has disputed an invoice."
- "Cash will be tight in the week the VAT payment and the supplier run fall together."
Avoid accounting language the owner does not use. "Gross margin" may need explaining the first time; "accruals" usually needs replacing with "costs we know about but have not been billed for yet".
A worked example in words: for a small manufacturing client, the firm closes the month, exports the income statement and balance sheet as PDF, sets year-to-date by hand to the client's financial year, adds a one-page cash summary from the bank reconciliations and a five-point commentary, and sends the pack within a week of month end. The owner replies with one question about a repairs bill, answered from the period trial balance the same day.
Close first, report second
Management accounts are only as reliable as the month behind them. Produce the pack from a month that has been closed, after the bank reconciliations, so the figures the owner sees are the figures that stay; the close is covered in closing a client's month.
Then agree the pack's contents with each client once, keep the format the same every month, and set a date by which it will arrive. Consistency is what turns monthly figures into a habit the owner relies on.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
