Picture this: You’re walking the exec team through a forecast.

Half the room’s squinting at your spreadsheet. Then Sales cuts in: “That $800K deal might slip.” Suddenly, everyone’s talking timeline, cash, and whether expansion’s still possible.

Your plan gets sidelined — not because it’s wrong, but because no one else sees what it means.

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Mask off

I could see through Darren's bullsh*t from across the boardroom table. What surprised me was that our CEO hadn’t.

Darren was the president of a division, and this was the monthly review for his business.

I loved these reviews. I could get properly up to speed on each business unit, and more often than not, something exciting happened in at least one of them. The CEO was a livewire... to say the least. But in Darren’s case, somehow, he had gotten the CEO wrapped around his little finger.

We were halfway through the year. Darren's division had fallen $3M behind their year-to-date EBIT target, but he didn't want to dwell on that... in fact, he didn't even mention it. Classic Darren move. Dodging the management accounts entirely, running down the clock, leaving only a few minutes for the financials.

When we finally got there, he skipped straight to a slide showing the latest version of the full-year forecast. And as if by magic, it showed forecast revenue and EBIT performance just ahead of budget. He accompanied it with a "nothing to see here"-type comment that was about as convincing as a three-dollar bill.

I did some quick math... and the math didn't math. To get this business unit back to budget in six months would require sales to grow by an average of 10% in the second half (versus a flat first half) and a few hundred basis points of margin improvement. Pure fantasy.

Time for some fun.

I stepped out, had my assistant push the next meeting by 30 minutes, and returned with a big grin: "Great news, Darren. We just freed up half an hour. Let's go through your management accounts line by line."

It didn't take long for the truth to expose itself.

Darren's "survive another day" strategy had failed him. With the facts laid bare, the CEO’s bullsh*t detector finally kicked in. He declared we needed to put the business unit into "special care" and that we'd be kickstarting a turnaround with a two-day on-site visit next week.

That’s corporate speak for ‘you are failing, we are sending the cavalry.’

Darren looked like he'd swallowed a lemon. For years, he'd perfected the art of corporate camouflage… staying invisible while others take the heat. Now his quiet kingdom was about to get noisy as hell.

As we filed out, the CEO delivered his knockout punch: "Oh, and Darren? Next month we're starting with the accounts. Skip the foreplay."

You can run, but you can’t hide

Welcome to part 4 of our 9-part FP&A mega-series:

• Week 1: We mapped the FP&A cycle

• Week 2: We set financial direction with long-range planning

• Week 3: We built the annual budget

• Today: We hold everyone accountable for their promises

Plans are just promises (sometimes not even promises people intend to keep). An FP&A function that only does forecasting (because it's the sexy bit) is missing its other crucial role: holding the business accountable for what it said it would do.

Making promises is easy. Keeping them is hard. How do you know if you're actually executing? Your monthly management accounts tell the real story.

Great management accounts are way more than a finance tool. They are the cornerstone of the CEO’s operating system. They explain: Are we delivering what we promised investors, customers, and our people? Or are we running on hope?

Monthly management accounts day is better than Christmas morning. When people ask why I love them so much, I give them the same answer every time: "How dare you interrupt me when I'm reading my monthly accounts."

Daily KPIs and weekly flash reports keep your finger on the pulse, but they're just snapshots. Monthly accounts help you build the movie, complete with plot twists and character development.

Who are monthly management accounts for?

These aren't your grandmother's statutory accounts. Management accounts are internal intelligence. By us, for us. No auditors, no regulators, no external bullsh*t. Just the people who actually run the business, figuring out if we're winning or losing.

These are intelligence packs for operators. Sales uses them to course-correct quotas. Ops uses them to track that those efficiency savings are actually hitting the bottom line. Product uses them to sanity-check whether their ‘innovation’ is actually driving gross margin.

Starting to understand why I love them so much?

Format of monthly management accounts

Here's the beautiful thing: there are no rules. No auditor breathing down your neck, no regulatory framework to follow. You have creative control over how you tell your story internally.

So what's the right format? Is there a template?

The right format is whatever drives the best performance from your business. You're like a financial Picasso: your keyboard is the paintbrush, Excel is your canvas.

I've seen too many businesses paralyzed by terrible management accounts because they think some higher authority dictates the format. Spoiler alert: there isn't one. Especially not ChatGPT.

First thing I do in any new finance role? Often, it’s to change the management accounts format. It's the choke point where planning meets reality. If the management accounts process is wrong (which it often is), everything downstream is probably f*cked too.

No, I can't give you a template to copy and paste. What your business needs will be different from mine. But I can give you 11 principles that separate management accounts that drive performance from the ones that don’t.

Great management accounts should:

1. Be built with a clear purpose in mind

2. Focus on the recent past, not forecasts

3. Use a simple, repeatable format

4. Be published on a reliable monthly rhythm

5. Close fast (ideally <5 days)

6. Hit year-end quality every month

7. Show the right level of chart of accounts detail

8. Use meaningful comparators

9. Tell a story through the numbers

10. Tie directly into the performance rhythm

11. Drive real follow-up and action

Let's dive in.

1. Be built with a clear purpose in mind

Your management accounts should tell the story of the 3-5 issues in your business at a moment in time. A story told with data, in a way that inspires immediate action.

If it isn’t doing that, you probably have too many pages, or too few, or the wrong audience, wrong metrics, wrong timing, etc.

2. Focus on the recent past, not forecasts

The monthly management accounts are there to hold a mirror up to what has happened in a business. Not look forward to what will happen. I apologize if this upsets you, but you need to trust me here.

Performance improvement starts with an honest assessment of the current state, not with promises about what comes next. The monthly management accounts are that honest assessment.

I’m not talking about what happened last year or last quarter. I’m talking about recent performance: what has happened in the last month, and what can we learn?

Good management accounts focus on the parts of the business that are underperforming. Or, the ones that could be even better. The management accounts must tell that story. They must shine a light on where performance must improve. If you conflate this with forecasts, you will remove tension from that message. And diminish accountability.

Honesty creates tension, and tension drives action.

Don’t misunderstand this message though … finance capability that can look forward, assess risks, and forecast well is vital, and we will cover this in other parts of this series.

But the monthly management accounts are not the place for this to have center stage.

3. Use a simple, repeatable format

This depends on the size and complexity of your business. At a minimum, all businesses (even the smallest) should report 2 pages: Income Statement and Cashflow. Reporting both Month and Year to Date Performance.

In larger and more complex businesses, your management accounts could reach ten pages (fifteen absolute maximum). But no more. I have run a large corporate on twelve pages, and I probably could have gotten it to 8 if I wanted.

Most people will only take one message from your accounts. A sophisticated reader might take three big messages. You don’t need 30 pages to deliver 3 messages.

As an example of what a management accounts pack for a bigger business could look like:

• Income Statement

• Cashflow Performance

• Balance Sheet

• Revenue & Gross Margin by income stream/business unit

• KPIs

• EBIT grid (build up of EBIT by income stream/business based on marginality)

• Waterfall of revenue and EBIT (budget/last year to actual)

• Cashflow Forecast (rolling weekly 13 weeks, or rolling monthly 12 months, depending on business)

• Risks & Opportunities (more on this later in the series)

In the case of the management accounts, you should not be changing the format each month to fit the story. It is vital, of course, that you are also preparing ad hoc analysis and materials on the topic du jour. But, again, the management accounts are not the place for them. This is an accountability tool - and a rigid format is important to make sure there are no places to hide.

4. Be published on a reliable rhythm

For almost every business, management accounts should be published monthly.

5 Close fast (ideally 5 days or less)

Closing speed is extremely important for monthly accounts. Much more so than most finance folk realize. I hate to overgeneralize, but we tend to overvalue precision and undervalue speed.

From my experience, businesses with fast closings have better performance cultures than those with slow closing speeds.

The management accounts are your feedback loop on performance for the business.

Tighter feedback loop = better-controlled and more consistent business performance.

The precise timeline will depend on:

• Maturity of your processes

• Complexity of your business

• Quality of your finance resources

Simple rule of thumb:

• World Class: <3 days after month end

• Excellent: 4-5 days

• Acceptable: 6-8 days

• Slow: 9-10 days

• Crap: 11 days+ (You are now nearer the end of the next month than the one you are reporting on. Be better.)

Fast close = fast correction. If you are still waiting on April’s numbers on May 15th, you’ve already lost half the month. You can’t course-correct revenue gaps, fix margin erosion, or reallocate capital in time. You’ve just made the job harder for every operator in the business.

6. Hit year-end quality every month

Making sure monthly management accounts are consistently accurate is hard.

Too many businesses fall short here and over-rely on big adjustments to tidy things up (at quarter end, or year end). Don’t do this. Get in the habit of a good quality, fast monthly close.

I’m not talking about your judgmental accounting areas (intangibles, leases, deferred tax etc). Those can wait until quarter / year end. But anything that touches operating performance (ie revenue down to EBIT) needs to be closed monthly. That means making sure your accrued and prepaid expenses are on point. Cut off issues are resolved, etc.

The bedrock of this is razor-sharp transactional processing throughout your business. I wrote about this at the end of last year, and dove into how you can achieve it, without dragging out your close.

7. Show the right level of chart of accounts detail

This is a question of precisely what you should measure.

You should include information from:

• Management Financial Statements: Income Statement, Balance Sheet & Cashflow

• Activity Measures: Volumetric information is key context for financial performance; i.e., units sold, hours billed, tonnage throughput, transaction volume, etc. Volume shifts are the biggest variance driver and touch the whole P&L. Contesting your financials with the level of activity in the business is crucial.

• KPIs: Non-financial measures that are leading indicators of financial performance, i.e., New sales appointments booked, Items Picked Per Man Hour, waste per unit.

• Ratios of the above, i.e,. Gross Profit per Unit Sold, Net Debt: EBITDA

Getting clear on what metrics are right for your management accounts is time well spent. If you want to go deeper, here is a recent post on KPIs.

Monthly management accounts do not need to be the same as GAAP-compliant financial statements. There is not enough detail in a GAAP Income statement to be useful internally. The two need to talk to each other, but they do not need to be the same.

If I have to choose between:

• Management accounts that reconcile neatly to the statutory GAAP presentation but make no sense to the business, OR…

• Accounts that actually explain performance but need a messy manual bridge to the statutory numbers

I’ll take the second. EVERY TIME.

It’s better to burden a few accountants than leave the whole business flying blind.

8. Use meaningful comparators

Picking the right ‘columns’ for your management accounts is just as important as having the P&L at the right detail.

Some examples:

• Actual for the Period

• Budget for the Period

• Variance to Budget

• Forecast for the Period (Which version?)

• Variance to Forecast

• Prior Year

• Year on year variance %

Repeat above for YTD

Too many management accounts (especially in corporates) try and talk to too many comparators, vs budget, vs multiple forecast versions. How do you know if you are winning?

There tends to be an attitude that throwing more in can’t do any harm. It can. The silent cost of a confused business.

You need to decide what your ‘hero variance’ is. What is the variance you will focus attention on? For many, this is Variance to Budget.

Your waterfalls and variance analysis should focus on this hero measure.

I’ve seen businesses that flex their budgets each month for actual activity levels. They then ‘hero’ the underlying variance to a ‘flexed budget’. So they can measure activity variances, and variances vs the flexed budget separately. I love this approach if you have the tools and resources to do it. It keeps the variances relevant for people who don’t control activity.

For very small businesses that do not have the scale to merit a full budget process, a standard fixed ‘model’ income statement can work as a comparator.

Even just comparing current month to last month or last 3 months is better than nothing. Particularly those without access to good FP&A resources.

I don’t report performance against rolling forecasts. It’s too easy to bury bad news with ‘death by a thousand cuts.’ Again, lots won’t agree, but I’m not here to make friends.

Finance is all about driving behavior, and reporting against rolling forecasts gives too many hiding places for bad behavior, from my experience. More on that in part 6 of this series.

9. Tell a story through the numbers

This is where your management accounts spring to life. You must provide robust commentary based on data from the management accounts. You should highlight (call out boxes, cell borders/highlights) the hero messages.

Use a big headline across the top of each page, signposting:

a) What happened

b) Why

c) What needs to be done

Here is an example:

“EBIT of $4m in January, missed budget by $2m, due to cost inflation eroding gross margins. A 3% selling price increase is urgently required to offset this.”

If the headline is that EBIT missed budget, highlight the EBIT variance to budget. Then make sure that the commentary gives the “why.” Make sure any reader of the management accounts is left 100% certain of what the one-line story is for the month.

And remember: this isn’t a finance readout, it’s a team briefing. Write for the commercial lead, the GM, and the ops head. Use language they understand. “$2M EBIT miss because churn was 1% worse in the enterprise segment” lands better than “variances primarily attributable to gross margin compression.”

10. Tie directly into the performance rhythm

There is no point doing 1-9 if you don’t link the results to your performance management cycle. Management Accounts should link to OKRs. Or personal objectives, or whatever system your business uses.

This is how you get your management accounts (output) down to the people on the ground (inputs). The golden thread. If you’ve decided to measure Average Revenue Per User in your management accounts, then you need to make sure it’s built into the OKRs of your GTM team.

11. Drive real follow-up and action

Once you review April management accounts and agree on what must get done, follow up on May accounts to make sure:

a) It happened (inputs)

b) It worked (outputs)

Rinse and repeat. We will dedicate next week’s post to this topic.

Net-Net

The monthly management accounts tell you if your business is keeping its promises. Is it executing its plans? And if so, is it working?

But what if it’s not? What if something is off? And what do I mean IF… something is off? Something is always off!

If your management accounts can’t make a frontline GM raise an eyebrow, or a CEO call an emergency audible, then they’re not doing their job. Monthly accounts aren’t compliance, they are combat.

That’s where the monthly performance reviews come in. The only part of the FP&A cycle I love even more than the monthly accounts. And that’s where we head next week!

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