Management Accounts and Budgeting
Statutory statements are built for outsiders and answer their questions. Management reporting answers yours: which contracts make money, where cost is rising faster than revenue, and whether the cash position holds through the next quarter. Most organisations have plenty of the first and very little of the second.
1
Questions
What you need answered
2
Structure
Chart and cost centres
3
Budget
From real assumptions
4
Report
Variance with commentary
5
Forecast
Rolling cash view
How We Build It
01
Defining the Questions
We start from the decisions you make repeatedly. Reporting designed from a template answers questions nobody asked while omitting the one thing you check first every month.
- Recurring decisions identified with management
- Measures that genuinely drive the business established
- Existing reports assessed for what is actually read
- Reporting frequency matched to decision cycles
02
Structuring the Accounts
Segment reporting is impossible if the chart of accounts cannot separate segments. We restructure the chart and cost centres so the analysis you want is a report rather than a monthly spreadsheet exercise.
- Chart of accounts restructured for management analysis
- Cost centres and segments defined
- Allocation basis for shared costs agreed and documented
- Comparatives restated so trends remain readable
03
Budget Preparation
Budgets built from operational assumptions rather than last year plus inflation. Volume, pricing, headcount and known contractual changes each become an explicit input that can be revisited.
- Assumptions built up by driver rather than by percentage
- Departmental input with a challenge process
- Capital expenditure and financing incorporated
- Scenario versions where the outlook is genuinely uncertain
04
Variance Reporting
Numbers with explanation. A variance table without commentary transfers the analytical work to the reader, which is precisely the work management reporting is supposed to do for them.
- Variance against budget and prior period
- Written commentary explaining cause, not restating the figure
- Distinction between timing and permanent variances
- Forecast outturn updated as the year progresses
05
Cash Flow Forecasting
Profit and cash diverge, and organisations fail on the second while reporting the first. A rolling forecast shows the position ahead rather than confirming it afterwards.
- Rolling thirteen week cash forecast
- Debtor collection and creditor payment assumptions
- Facility headroom and covenant monitoring
- Sensitivity to the assumptions most likely to break
What You Receive
- Restructured chart of accounts and cost centre design
- Annual budget built from documented assumptions
- Monthly variance reporting with written commentary
- Rolling cash flow forecast maintained monthly
- Segment and cost centre profitability analysis
- Board pack designed for decisions rather than completeness
Indicative Timeline
Designing the reporting takes three to five weeks including the chart restructure. Budget preparation is a seasonal exercise normally run over four to six weeks ahead of the financial year.
- Requirements and decision mapping: one week
- Chart and cost centre restructure: one to two weeks
- First reporting cycle and refinement: one month
- Budget preparation: four to six weeks, seasonal
What Management Reporting Covers
Reporting built around decisions rather than around the statutory format.
Segment Profitability
Which divisions, contracts or product lines actually make money once costs are allocated properly.
Cost Analysis
Where cost sits, how it behaves with volume, and which lines are growing faster than revenue.
Budget Variance
Performance against budget with commentary on cause rather than a table of differences.
Cash Forecasting
A rolling forward view of cash, which is where most solvent businesses actually get into trouble.
Working Capital
Debtor days, creditor days and stock turn, and what each is doing to the cash cycle.
Board Reporting
A pack a board can read in fifteen minutes and take decisions from.
Frequently Asked Questions
Why not just use our statutory accounts?
Because they are built for outsiders. They answer whether the entity is fairly stated, not which contract loses money. Statutory statements aggregate exactly the detail management needs separated.
How detailed should management reporting be?
Less detailed than most people build. A pack nobody finishes reading is worse than a shorter one they act on. We aim for a pack a board reads in fifteen minutes with detail available behind it.
Our budget is always wrong. What is the point?
A budget is a plan, not a forecast, and the value is in the assumptions being explicit enough to know which one broke. Budgets built as last year plus a percentage cannot tell you that, which is why they feel pointless.
What is a rolling cash forecast?
A forward view, usually thirteen weeks, updated continuously rather than prepared annually. It is the single most useful report for any business where cash is tight, and it is routinely the one that does not exist.
Can you allocate our overheads properly?
Yes, and the basis matters more than the precision. An arbitrary allocation makes segment profitability meaningless, so we agree and document the basis with you rather than defaulting to a percentage of revenue.
Do you help present this to a board?
Yes. Attending the meeting to explain variances and answer questions is usually the most valuable part, particularly where the board is non executive and needs the numbers interpreted rather than delivered.
Related Services
This sits inside our Financial and Management Accounting practice. Related work: Business Advisory for modelling and performance improvement, and Forecasting and Anomaly Detection where forecasting should be automated.
