What would happen in your organisation if you stopped producing management accounts?
I’ve had to delay issuing management accounts a few of times in my professional career. (It’s funny, it feels scary even admitting that, such is the sacred status of the Month End Routine. It makes me feel like I’ve failed as a finance director.)
In all cases, it’s been a carefully calculated decision, taken because there are more immediate priorities. Or because we’ve changed systems.
When I’ve had to do this, I have also sent a note to budget holders apologising, giving an estimated time for production and asking them to get in touch if there is information they need right now for decisions and reports.
It’s always interesting what they ask for. In my experience, very little, and it’s often information that isn’t part of the standard management accounts anyway.
This is not to say budget holders I’ve worked with are lazy or uninterested in finance – far from it! It’s just that the standard reporting pack was obviously not of much use to them and they didn’t generally miss it when it was gone.
Senior managers did miss them – but not so much because they wanted specific information, more because absence of numbers (understandably) made them nervous.
Stop! Look! Listen! Think!
Management accounts should be more than just a comfort blanket. They should provide you and budget holders with information to support decision making. If people don’t miss them, then they’re not effective.
But too often, we fall into the trap of providing management information in the format that suits us as accountants. Or we produce something that we think the board will like but doesn’t help the people making day to day operational decisions. It’s easy to fall into a month end routine and feel like you’re being productive. But useless management accounts are another example of a useless control.
We also need to remember that many budget holders lack either the experience or the confidence to review what they receive or ask for what they really need. I’ve had numerous conversations along the lines of “Finance sends me these monthly accounts and my manager says I need to review them but I don’t know what to do”. There’s an assumption that Finance Knows Best but do we really? Are we confident that we’re producing what our stakeholders need, particularly if they’re too nervous to tell us otherwise?
I’m not seriously advocating that you kick start this conversation by ditching your next set of management accounts. But don’t make the same mistake as I did for many years, which is to assume that what you’re producing is helpful without finding out how your beautifully wrought numbers are actually used.