How to produce valuable management accounts using Sage Line 50

Sage Line 50 can be customised to produce a wide range of management accounting information at a click at of a button.

This accountancy software comes pre-loaded with a detailed Profit & Loss (P&L) and Balance Sheet but like all reports in Sage Line 50 you can customise templates for other reports such as summary Profit & Loss Accounts and Overhead Analysis Reports.

All of these reports can be further customised to include the ability to drill down from the headline amounts into the various nominal code summary reports that make up the balance and then down again into the various individual transactions should you desire this level of detail. It is a very powerful way to help you understand your financial results and overall business performance.

Here are 5 critical steps to produce an accurate set of management accounts using Sage Line 50:

Step 1: Set-up & Review Your Chart of Accounts (COA)

Go to: Modules > Nominal Ledger > Chart of Accounts

 The COA module allows you to create your own customised P&L and Balance Sheet reports.

Even if you want to use the standard Sage templates it is vital that you start your management accounts production process by checking that all of your nominal accounts are included in the correct sections of your reports.

To do this click ‘Edit’ and then hit ‘Check’. The program will then run a validation check to ensure that all nominal accounts are represented in your accounts.

Step 2: Ensure all sales & purchase invoices/credit notes are posted for the period

The management accounts are only as accurate as the information that is entered into the system. Before the accounts are run for the period all invoices and credit notes need to be posted for the period.

You should also prepare trade creditors reconciliations to the supplier statements to ensure all transactions are posted.

Before the management accounts are produced you should run the aged debtors and creditors’ reports and review the listings.

Beware of negative balances:

Negative balances mean that income or expense is missing from your P&L.

Note: When running your aged reports remember to click ‘Excl. Later Payments’.

Step 3:  Reconcile all bank accounts

All lodgements and payments must be entered into the software before the accounts are produced. You must also reconcile the bank as per Sage to the bank statements at the end of the period.

Step 4: Post Journals

The following key journals must be posted to Sage to ensure the accuracy of the management information:

• Wage Journals – Gross wages need to be represented in the P&L. This normally involves moving the net wage payments and PAYE/PRSI/USC charge from the balance sheet to the P&L.
• Stock Journals – A closing stock amount is needed at the end of the period under review. You must post the opening and closing stock journals to the P&L and Balance Sheet.
• Prepayments – You must consider if there are any invoices/payments posted to the P&L in the period that relate to a period greater than the accounts being produced e.g. insurance invoice for the year posted in Q1, you should pre-pay 3 quarters of this amount to the balance sheet if you are running a P&L for Q1.
• Accruals – Are you missing any expenses for the period that needs to be included? e.g. rent not paid yet.

Step 5: Producing the Management Accounts

Go to: Modules > Financials > Profit & Loss or Balance Sheet

You are now ready to run your management accounts in Sage. Based on the report templates you have set-up in the COA at Step 1 you will be able to run these accounts from the ‘Financials’ module e.g. when you click on Profit & Loss you will be able to choose the period you want and select the COA template from a drop down menu as below.

Your management accounts pack for the company directors should contain the following key reports:

• Profit & Loss Account
• Balance Sheet
• Aged Debtors Report
• Aged Creditors Report

If you want to get the most out of your Sage Line 50 accountancy software, DBASS can help your business.

We can provide training for your staff, help you customise your reports and offer on-going support to ensure that you get timely, accurate, management accounts to help you make those important business decisions.

If you would like more information, please contact DBASS Manager, Seán O’Reilly on 01 849 8800.

Written by Seán O’Reilly, DBASS Manager

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