Running a successful business isn’t just about making sales—it’s about keeping your business finances in order so you can grow sustainably and avoid cash flow surprises.
Whether you’re handling your finances in-house or outsourcing them to a finance team like ours, there are key checks you should be making every month to keep your business in good financial health.
Here are 12 essential things to review every month:
1. Cash Flow Position
Cash is the lifeblood of your business. Check your cash flow statement to see how much money is coming in and going out. If your cash reserves are running low, identify where the bottlenecks are and take action – whether that’s chasing late payments or adjusting spending.
2. Bank Reconciliations
Ensure your bank statements match your accounting records. Unreconciled transactions could indicate missing income, duplicate payments, or errors that might distort your financial picture.
3. Aged Receivables (Outstanding Invoices)
Check your list of unpaid customer invoices. Who owes you money? How overdue are they? Consistently late payments can hurt your cash flow, so follow up on outstanding invoices and consider adjusting payment terms if late payments are a recurring issue.
It’s also crucial to issue invoices promptly – delays in sending invoices can lead to delays in payment, which in turn affects your cash flow. The sooner your customers receive their invoices, the sooner they can process and pay them.
4. Aged Payables (Outstanding Bills)
Review what you owe to suppliers and ensure you’re paying on time. Late payments can lead to damaged relationships or unnecessary interest charges. If cash flow is tight, prioritise essential suppliers and negotiate payment terms.
5. Profit & Loss Review
Look at your monthly profit and loss (P&L) statement to see if your revenue and expenses are on track. Compare against previous months and your budget—are there any unexpected changes that need addressing?
6. Business Savings & Tax Reserves
Set aside money for tax liabilities such as VAT, Corporation Tax, and PAYE. Unexpected tax bills can cause cash flow problems, so having a dedicated savings strategy is crucial.
7. Payroll & Staff Costs
Ensure payroll is processed correctly and on time, and check for any discrepancies. If staff costs are rising, assess whether this aligns with business growth or if there are inefficiencies to address.
8. Expense Tracking & Cost Control
Are your expenses creeping up? Review your spending to ensure you’re not paying for unused subscriptions or unnecessary costs. Small leaks can add up over time.
9. VAT & Other Tax Deadlines
Ensure you’re keeping up with VAT returns, PAYE, and other tax obligations. Missing deadlines can lead to penalties, so stay on top of them or use an outsourced finance function to manage this for you.
10. Sales Performance & Pipeline
Revenue isn’t just about what you’ve made—it’s also about what’s coming in. Review your sales figures and check your pipeline. If sales are slowing, consider adjusting your strategy or increasing marketing efforts.
11. Stock & Inventory (If Applicable)
If you sell products, review your inventory levels. Are you holding too much stock and tying up cash? Or are you running low and at risk of losing sales? Keeping a balance is key.
12. Business Goals & Financial KPIs
Each month, assess your progress towards key financial goals. Are you hitting your revenue targets? Have you reduced costs where needed? Are you staying within budget? Tracking KPIs will help you make informed business decisions.
By running these checks monthly, you’ll gain a clearer understanding of your business’s financial health and be able to take proactive steps before issues arise.
If you’d rather focus on growing your business and leave the numbers to experts, our outsourced finance function can handle all of this for you – giving you peace of mind that your finances are in safe hands.
Need help staying on top of your business finances? Get in touch with us today.
Call us on 01386 366741