Glossary
Management accounts
The internal monthly or quarterly figures a business runs itself on, fresher than the year-end statements but produced without external review.
In plain English
Management accounts are the profit and loss and balance sheet a business produces internally through the year, usually straight from its accounting software. They exist for running the business, not for reporting, so they are current in a way year-end financial statements never are.
Their weakness is that nobody outside the business has checked them. Cut-off errors, unreconciled accounts and optimistic revenue recognition all live comfortably in management accounts until someone tests them against bank statements and lodgements.
Why a lender cares
Lenders want management accounts for the year to date because last year's statements may describe a different business. But they weight them by how well they reconcile: management accounts that tie to the BAS lodgements and the bank deposits carry real evidentiary force. That reconciliation is one of the first things we do with any file.
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