2 Mins
Big, blended numbers can hide the truth – and that’s where problems start. When revenue streams and costs aren’t broken down, loss-making work can conceal itself behind averages. In this article we show how segmented management accounts helped Eastern Precision Ltd uncover hidden margin issues and make strategic decisions that increased profitability.
Company Background
- Company: Eastern Precision Ltd
- Industry: Precision engineering
- Work Type: High-value aerospace and automotive contracts
- Challenge: Management accounts grouped all revenue and costs together, showing an average margin of 26%.
Leadership assumed all contracts performed similarly. They didn’t.
The Problem: Averages Hiding the Reality
Aggregated reporting masked major differences among contracts. Pricing and resource allocation were based on incomplete data, and one long-standing contract was eroding overall profitability.
What Segmentation Revealed
After implementing segmented management accounts using Xero and Fathom:
- True margins became visible: A “healthy” average margin masked major variation.
- Alpha contracts: 38–43% margins
- Beta contracts: 18–24% margins
- Gamma contracts: 4–9% margins – pulling overall performance down
The overall margin looked stable only because Gamma’s poor performance offset Alpha’s strength.
Strategic Decisions Taken
- Increased pricing for future Beta-type contracts by 15%
- Declined renewal of Gamma-type contracts
- Redeployed skilled staff from Gamma to Alpha-type work
- Negotiated supplier discounts on Beta-type contracts
The Outcome
Within nine months:
- Overall margin improved from 27% to 34%
- Annual profitability increased by £0.3m
- Leadership gained confidence for future fundraising discussions
Segmentation didn’t just improve reporting – it improved the business.
Ready to Get Clarity, Confidence and Control Over Your Numbers?
If you want deeper insight into what’s really driving your business – and the confidence to make smarter, faster decisions — we can help.
Our ABS team will make sure your systems, coding, and reporting structure are set up properly, giving you clear, reliable monthly management accounts that actually support decision-making.
Our Corporate Finance team will help you use those stronger accounts to:
- Build a credible growth story
- Strengthen valuation
- Prepare for fundraising, succession, or sale
Together, we give you the visibility and strategic support you need to plan for whatever’s next.