Management accounting for owners: where to start

Most owners learn the real state of affairs too late — when the accountant files last quarter's reports. But tax reporting answers «how much do we owe the state?», not «are we earning, and on what?». These questions require different kinds of accounting.

How management accounting differs from bookkeeping

Bookkeeping follows strict rules and serves external users. Management accounting you keep for yourself, and its key property is timeliness. An approximate number today beats a perfectly verified one two months later.

• Bookkeeping looks backwards; management accounting helps you decide now.
• Bookkeeping deals with legal entities; management accounting with business lines, channels and products.
• Bookkeeping recognizes income by documents; management accounting separates cash and profit.

Three reports everyone needs

• Cash flow — how much money came in and went out, and whether it will last the coming weeks. Protects against a cash gap.
• P&L — whether you actually earn, with all expenses taken into account.
• Balance sheet — what you own and what you owe: inventory, receivables, payables, debts.

Where to start in practice

Start with the money: set up a payment calendar and record inflows and outflows by category. Within a month you'll see the cost structure and the «holes». Then add a revenue breakdown by business line — it will become clear which product actually feeds the business.

The main mistake is keeping everything in scattered spreadsheets no one reconciles. When sales, inventory and payment data live in one system, management reports assemble themselves. That's exactly what BAS covers.