4. What Management Accounts Should Tell You (But Often Don't)

You've finally got management accounts.

Your bookkeeper or accountant sends them over every month (or quarter). There's a profit and loss statement, a balance sheet, maybe a few charts. Numbers in columns. Dates across the top.

You open the PDF, scan the figures, and... now what?

Do you know if last month was good or bad? Whether you should be worried or reassured? What decision to make next?

If the answer is "not really," you're not alone.

Most management accounts fail at the one thing they're supposed to do: help you understand your business and make better decisions.

Let's talk about what management accounts should tell you — and why so many of them don't.

The Problem: Numbers Without Insight

Management accounts are meant to give you control. They're supposed to be the dashboard that helps you steer the business.

But too often, they're just... numbers.

A profit and loss statement that shows £47,283 revenue and £12,456 in overheads. Okay. Is that good? Compared to what? What does it mean?

Numbers alone don't drive decisions. Context, trends, and interpretation do.

Good management accounts don't just show you what happened. They help you understand:

●       What it means

●       Why it happened

●       What to do about it

If your management accounts don't do this, they're not really management accounts — they're just formatted data.

What Management Accounts Should Actually Tell You

1. Did You Make Money Last Month (Or Quarter)?

This sounds basic, but it's surprisingly easy to get wrong.

Your bank balance might look healthy because a big invoice just cleared. But once you account for costs that haven't hit yet, staff salaries, tax provisions, and expenses that haven't been reconciled, did you actually make a profit?

Good management accounts show your true profit position — not just cash in the bank.

And crucially, they show it in context:

●       How does it compare to last month?

●       How does it compare to the same month last year?

●       Is profit trending up or down?

Without this context, one month's profit figure is almost meaningless.

2. Where the Money Actually Went

Revenue might be strong, but if profit is flat (or falling), something's eating into your margins.

Good management accounts break down your costs clearly, so you can see:

●       Direct costs (what it costs to deliver your service)

●       Overheads (rent, software, admin, etc.)

●       Staff costs (salaries, NI, pensions)

●       One-off expenses vs recurring costs

You should be able to spot when something's changed.

Did software costs jump because you added a new tool? Did a big project push up subcontractor costs? Are overheads creeping up faster than revenue?

If your accounts just lump everything into vague categories like "admin" or "expenses," you can't learn anything useful from them.

3. What Your Margins Look Like (And Whether They're Holding)

Gross margin (revenue minus direct costs) is one of the most important numbers in your business.

It tells you how much is left after you've delivered the work — before you pay overheads, salaries, and yourself.

If your gross margin is healthy (say, 60-70% for a service business), you have room to grow.

If it's thin (30-40%), every cost increase or pricing mistake hurts.

Good management accounts show you gross margin consistently, so you can track whether it's stable or slipping.

If margin drops from 65% to 55% over a few months, that's a red flag. But you'll only spot it if your accounts actually show you the trend.

4. Cash Flow: What's Coming (Not Just What's Here)

Your bank balance is a terrible indicator of financial health.

It might look healthy today because a client just paid a big invoice. But if you have three months of expenses about to hit, three invoices stuck in "awaiting payment," and a VAT bill due next month, that healthy bank balance is lying to you.

Good management accounts include cash flow forecasting:

●       What cash do you have now?

●       What's due to come in (and when)?

●       What's due to go out (and when)?

●       Where will you be in 30, 60, 90 days?

This is what stops cash flow surprises.

You can see the crunch coming and take action — chase invoices, delay a purchase, adjust payment terms — instead of being blindsided.

5. Trends, Not Just Snapshots

One month's figures tell you very little.

Did revenue drop because it was a quiet month, or because something's wrong? Did profit spike because of one big project, or because you're genuinely more efficient?

You can only tell by looking at trends over time.

Good management accounts show:

●       Month-on-month comparisons

●       Year-on-year comparisons

●       Rolling 3-month or 6-month averages

●       Visual trends (charts, not just tables)

This lets you see patterns:

●       Is profit steadily improving, or volatile?

●       Are overheads rising faster than revenue?

●       Is Q4 always weaker, or was this year different?

Without trends, you're guessing. With trends, you're learning.

6. What It All Means (Not Just What the Numbers Are)

This is the big one.

Most management accounts are just... numbers on a page. No commentary. No interpretation. No "here's what you should pay attention to."

Good management accounts include insight:

●       "Profit dropped this month because we hired mid-month, so had a full salary cost but only half a month's revenue from that person."

●       "Gross margin tightened because we underpriced that big project — we should adjust pricing for similar work."

●       "Cash flow will be tight in two months when the tax bill hits — worth chasing the three overdue invoices now."

This is what turns data into decisions.

If your accountant or bookkeeper just sends numbers without context, they're not doing the job properly.

Why So Many Management Accounts Fall Short

If good management accounts are so valuable, why do so many fall short?

Usually, it's one (or more) of these reasons:

1. They're Prepared by Someone Who Doesn't Understand Your Business

A bookkeeper or accountant who just processes transactions and formats reports doesn't know:

●       What your gross margin should be

●       Why a particular cost spiked

●       What trends matter for your industry or business model

They produce accurate numbers, but no interpretation or insight.

2. They're Too Late

If your management accounts arrive six weeks after month-end, they're not useful anymore.

You've already made decisions for the following month. Problems that could have been caught early are now entrenched.

Good management accounts should arrive within 2–3 weeks of month-end. Fast enough to act, slow enough to be accurate.

3. They're Too Complicated (Or Too Vague)

Some management accounts are overloaded with detail — 15 pages of line-by-line breakdowns that no one actually reads.

Others are too vague — "expenses: £12k" with no breakdown or context.

Good management accounts hit the middle ground: clear, concise, focused on what actually matters.

4. They're Just Compliance, Not Insight

Many accountants produce management accounts because clients ask for them, but they're really just compliance documents dressed up with a different name.

They meet the requirement, but they don't deliver the value.

Real management accounts are designed to help you make decisions, not just tick a box.

What Good Management Accounts Look Like in Practice

Here's what we send our clients every month:

1. Executive Summary (1 page)

●       Profit this month vs last month vs same month last year

●       Key highlights or concerns

●       One or two action points

2. Profit & Loss (1 page)

●       Monthly breakdown with comparisons and trends

●       Gross margin clearly shown

●       Overheads grouped sensibly (not 50 line items)

3. Cash Flow Forecast (1 page)

●       Current position

●       What's coming in/out over the next 90 days

●       Any potential pinch points flagged

4. Commentary (1 page)

●       What happened this month and why

●       What it means for next month

●       Any trends or decisions to consider

Total: 4 pages. Takes 20 minutes to read. Leaves you informed, not overwhelmed.

What to Do If Your Management Accounts Aren't Helping

If your current management accounts feel useless, unclear, or just confusing, it's worth asking:

1. Do they arrive on time? (Within 2–3 weeks of month-end?)

2. Do they show trends and comparisons? (Not just one month in isolation?)

3. Is gross margin clearly shown?

4. Is there any commentary or insight? (Or just numbers?)

5. Can you make a decision based on them? (Or do you still feel uncertain?)

If the answer to most of these is "no," you're not getting what you're paying for.

Good management accounts aren't a luxury. They're a core business tool. And if yours aren't helping you make decisions, they're not doing their job.

The Questions Your Management Accounts Should Answer

Here's a simple test. Look at your last set of management accounts and see if you can confidently answer these questions:

1. Did we make money last month?

2. Is our profit improving or declining?

3. What drove the change from last month?

4. Are our margins healthy or slipping?

5. Will we have enough cash in 60 days?

6. Can we afford to hire someone new?

7. Which clients or projects are most profitable?

8. What should we focus on next month?

If you can't answer at least 6 of these 8, your management accounts need work.

Management accounts should make you feel more in control, not more confused.

They should help you understand what's happening, why it's happening, and what to do next.

If yours are just numbers on a page with no context, no trends, and no insight, it's time to expect more.

Because the businesses that grow profitably and sustainably? They're not flying blind.

They're not hoping everything's okay.

They're looking at numbers that actually tell them something useful.

How We Help

We provide management accounts that actually help you run your business — not just tick compliance boxes.

What you get:

●       Bookkeeping Services for Growing UK Businesses | The UK Virtual Bookkeeper — Clean books + monthly insight + commercial interpretation

●       Monthly Management Accounts for UK Businesses | Financial Insight | The UK Virtual Bookkeeper — Reports designed for how service businesses actually work (utilization, project margins, capacity planning)

●       Advanced Financial Reporting UK | Deeper Insights for Business Owners — The full finance function (bookkeeping + reporting + insight + strategy) without the £150k+ cost of hiring in-house

●       Fractional CFO Services for Growing UK Businesses | The UK Virtual Bookkeeper— Strategic financial leadership for businesses outgrowing bookkeeping

Every month you receive:

●       Executive summary (what happened and why)

●       P&L with trends and comparisons

●       Cash flow forecast (90 days ahead)

●       Commentary and recommended actions

All delivered within 2 weeks of month-end. All explained in plain English. All focused on helping you make better decisions.

Want management accounts that actually help? [Book a discovery call → www.theukvirtualbookkeeper.com