What you get from the pack.
Five themes run through it. Each answers a question a director asks and prompts an action. This describes the layout, not any company’s figures.
1. Managing profitability. Where does the profit come from?
The profit and loss runs from income through direct costs to gross profit, then overheads, down to the profit or loss for the period. Columns sit side by side: this month, the year to date, budget and last year. Where the books support it, margin is shown by product, service, customer or period, so one weak job hiding inside a good month shows up.
Read gross margin first. If it moves, the cause is price, the mix of work or direct cost. If it holds and overheads move, the cause is in the running costs. The action it prompts is specific: reprice, change or drop a line of work, challenge a cost, or leave things alone because the month is in line with last year.
2. Managing the balance sheet monthly. What do we own and owe?
Assets come first: bank balances, money customers owe, stock where the company holds it, and equipment. Liabilities follow: supplier bills, VAT, PAYE and National Insurance owed to HMRC, pension contributions owed, loans, the director’s loan account where there is one, and the corporation tax set aside on the profit made so far. Net assets and the equity that funds them close the page.
Seen monthly, tax and payroll liabilities are set aside as the profit is made, so nothing surprises the director at the year end. The question is how much of the bank balance is already spoken for. The action is to keep that money back and decide what is genuinely free to spend, draw or invest.
3. KPIs. Which numbers should we watch?
Finstem chooses the measures with you, starting from how the company earns money and where it could lose control. A company that waits on customers needs different numbers from one with a large wage bill, and the measures differ by sector, as they do for haulage and transport companies. Examples of the kind of measure used:
- Gross margin: gross profit as a percentage of sales. It shows whether each pound of sales still leaves the same amount after direct costs. A fall prompts a look at pricing, supplier costs or the mix of work.
- Debtor days: the average number of days customers take to pay, worked out from money owed against sales. A rise prompts earlier chasing or tighter payment terms.
- Cash runway: the cash balance divided by the average monthly amount by which cash going out exceeds cash coming in. It applies when cash is falling, and shows how many months the current balance lasts. It prompts a decision on spending, funding or pricing while there is still time.
- Payroll as a share of income: the full cost of employing people (wages, employer’s National Insurance and pension contributions) divided by income. It shows whether pay and headcount are keeping pace with sales, and prompts a review before the next hire or pay rise.
These are definitions, not targets. Whether a figure is good depends on the business, so Finstem reads it against your own history.
4. Payroll. What does the team cost against what we earn?
The pack sets payroll cost against income and shows what the team costs in total, so a hire or a pay rise can be weighed before it is made. It also reconciles the payroll liabilities (PAYE, National Insurance and pension contributions owed) to the ledger each month, so the amount the balance sheet says is owed agrees with what payroll says is owed.
The question is whether the company can afford the team it has and the one it plans. The action is to review before the next hire or pay rise, and to raise any mismatch while it is small.
5. The working capital cycle. How fast does work turn into cash?
The working capital cycle is the time between paying suppliers and receiving cash from customers. It is built from three measures: debtor days (how long customers take to pay), creditor days (how long the company takes to pay suppliers) and stock days (how long stock sits before it is sold, for companies that hold stock). The longer the cycle, the more cash is tied up funding the business.
ACCA gives the formulas as: receivables days = (average receivables / sales) × 365; payables days = (average payables / cost of sales) × 365; inventory days = (average inventory / cost of sales) × 365; and cash operating cycle = inventory days + receivables days − payables days. ACCA’s method assumes year-end balances stand for the average and that all sales are on credit; in practice treat VAT consistently, because receivables include VAT and sales do not.
The cash page shows money in, money out and what is already committed. Actions it prompts: chase invoices, agree terms, hold less stock, time payments. A cash forecast puts dates on the same cycle, showing when invoices are expected to become cash and bills fall due, so a gap shows before the bank balance does.
Budgets, forecasts and the walk-through call.
A budget is the plan for the period: the income, costs and cash the directors intend. A forecast is the current expectation of where the figures will land, given what has actually happened so far. The difference between actual and budget is the variance.
The profit and loss sits against the budget and against last year, and the forecast is part of the pack. On the monthly walk-through call, by phone, video or in person, Finstem covers what changed, why, and what to decide next, including the variances worth acting on. That call is the commentary on the numbers.
Who asks for management accounts, and why.
The directors read them first. After that, the people who ask are those deciding whether to put money in or leave it in: a lender reviewing an overdraft or a loan, an asset finance provider, an investor, or a business partner outside the day-to-day numbers. Year-end accounts reach them months after the period they describe. Each lender sets its own requirements, and Finstem cannot promise that any lender will accept a given pack.
Bookkeeping and management accounts.
Bookkeeping records and reconciles each transaction in the ledger. Section 386 of the Companies Act 2006 requires every company to keep adequate accounting records, sufficient to show and explain its transactions and to disclose its financial position with reasonable accuracy at any time. Management accounts read that ledger back to you every month.
What Finstem needs from you each month.
- Bank feeds connected and left connected.
- Purchase invoices and receipts sent or uploaded as they arise.
- Payroll data: starters, leavers and pay changes, so the payroll cost is right.
If the books are behind, the pack waits until the bank is reconciled, and Finstem asks you for what is missing by WhatsApp. If the records are months behind, catching them up comes first, and that work is scoped and quoted in writing before it starts.
How the pack feeds the year end, tax planning and VAT.
Year-end accounts. The monthly pack and the year-end accounts come from the same ledger, so nothing is rebuilt at the year end.
Tax planning. The year-to-date profit and the tax set aside are the starting point for decisions on pay, dividends and purchases. Tax planning in Oswestry uses the same figures before the year end, while those decisions can still change the bill.
VAT. If the company is VAT-registered, the VAT return is prepared from the same ledger. GOV.UK states that all VAT registered businesses should now be signed up for Making Tax Digital for VAT.
What drives the fee.
There is no price list. Finstem quotes a fixed monthly fee in writing after a free 20-minute discovery call. What moves the fee:
- The number of transactions each month.
- The number of bank accounts and cards to reconcile.
- Whether there is payroll, and for how many people.
- Whether the company is VAT-registered.
- The number of companies involved.
- How current the books are when Finstem starts.
Anything outside the agreed scope is quoted separately in writing before it starts.
Oswestry, Shropshire and online across the UK.
Finstem is at 21 Hampton Road, Oswestry. It meets clients in person across Shropshire, at your premises or in Oswestry, and by phone or video anywhere in the UK. See accountants in Oswestry for the full service. If you are moving from another accountant, switching to Finstem takes one email from you. Finstem acts for limited companies only.
Reviewed October 2026. The Companies Act 2006 sections cited were checked at legislation.gov.uk, the Making Tax Digital statement at GOV.UK, and the working capital formulas at ACCA (Working capital management), on 10/10/2026.
