Accountants spend hours getting the month-end numbers right and minutes on the paragraph that explains them. Yet the paragraph is the only part most clients read. If it's a list of figures they could have seen in the statements, they stop reading it too.
Good commentary is short, plain and useful. It tells the client how the month went, why the numbers moved, and what to do about it. It's the part of Monthly Review clients read first, and it works just as well at the top of an emailed PDF.
The four-part structure
| Part | Length | What it says |
|---|---|---|
| Headline | Two sentences | How the month went, and the one thing that matters most |
| What changed and why | One or two sentences per flag | The significant movements, each with its cause |
| What to watch | One to three bullets | Things that will affect the next month or two |
| Questions | As needed | Anything you couldn't explain from the books |
Plain-language rules
Round, then compare
"Revenue was $148,200" is a fact. "Revenue was about $148k, up 4% on August and 27% on last September" is information. Every number in the commentary should be rounded and compared with something: last month, the same month last year, the plan or a target.
Cause before percentage
Clients care why, not how much in percent. "Professional fees were $6k higher because of the one-off audit preparation for the lender" beats "Professional fees increased 196%".
Say what it means
Finish each point with the consequence: whether it's a one-off, whether it will recur, what it does to cash or margin. That's the part the client can act on.
Use the client's words
Write "materials" if that's what they call it, not "cost of goods sold, direct materials". Write "the Kingston job" if that's how they think of it. Commentary that sounds like the client's business gets read.
Use points, not percent, for margins
"Gross margin fell 1.1 points to 30.6%" is clearer than "Gross margin fell 3.5%", which most readers misread.
Before and after
| Before | After |
|---|---|
| Revenue increased by $5,850 (4.1%) month over month. | Revenue was up 4% on August, and 27% on last September. |
| Professional fees increased 196% from $3,120 to $9,240. | Professional fees were $6k higher because of the audit preparation for the lender. That's a one-off; expect them back to normal in October. |
| Gross margin decreased from 31.7% to 30.6%. | Gross margin slipped about a point, to 30.6%, because you restocked materials ahead of Q4. It should recover as those orders ship. |
| Net income decreased by $4,355 (19.8%). | Profit was just under $18k, down about $4k on August, almost all of it the audit preparation and the restocking. |
A worked example
Here's September commentary for a fictional client, Harbor & Pine Co., built on the review in How to review a client's P&L every month:
September in short: A solid month for sales, with revenue up 27% on last September. Profit was just under $18k, down about $4k on August, but almost all of that is one-off.
What changed: Professional fees were $6k higher than usual because of the audit preparation for the lender review; that won't recur. Materials were up about $3k as you restocked for the Q4 order book, which took gross margin down about a point to 30.6%.
What to watch: Receivables are up as the Q4 invoices go out, so cash will be tighter in early November than the profit suggests.
A question: There's a $1,200 payment to Westbrook Supply coded to repairs. Was that for the van, or for a job?
That's about 120 words. The client knows how the month went, why, what's coming and what you need from them.
Common mistakes
- Restating the statements. If a sentence could be generated from the P&L alone, it's not commentary.
- Explaining every line. Explain the flagged ones. Use materiality and variance thresholds to decide which.
- Burying the headline. If cash is going to be tight next month, that's the first sentence, not the last.
- Guessing. If you don't know why something moved, ask.
- The same paragraph every month. If the commentary could be copied from last month, the client will notice, and stop reading.
Frequently asked questions
What is month-end commentary?
Month-end commentary is the short written explanation an accountant adds to a client's monthly financial statements. It summarises how the month went, explains the significant changes in plain language and points out anything the client should act on or watch.
How long should month-end commentary be?
Usually 100 to 200 words for a small business: a two-sentence headline, one or two sentences per significant change, and a short list of things to watch or questions. Clients who want more can read the full statements.
Should commentary use exact figures?
Round them. $148,200 becomes 'about $148k' or '$148,200' at most; $17,670 becomes 'just under $18k'. Exact figures belong in the statements. In commentary, rounded numbers with a comparison are easier to remember.
What should I do if I can't explain a variance?
Say so and ask. 'Professional fees were $6k higher than usual; can you tell us what the September invoice from Brightline Legal was for?' is better commentary than a guess, and it often uncovers a coding error.