How to Assess and Improve Your Business’s Financial Health

Running a business without regularly checking its financial health is like driving a car without a dashboard—you won’t know if you’re running low on fuel or speeding toward a problem. Whether you're a startup or an established company, a financial health check should be part of your regular business routine.

To make this process easier, we’ve created simple checklists that highlight the key areas you should monitor. These checklists can help you identify strengths, uncover weaknesses, and guide your next financial moves.

1. Cash Flow Checklist

Cash is king. If cash isn’t flowing, your business isn’t growing.

q Do you have a monthly cash flow forecast?

q Are you collecting receivables within 30 days?

q Do you maintain a minimum of 2 months of operating expenses in cash reserves?

q Are your payables aligned with your receivables?

q Have you reviewed your largest cash outflows for unnecessary spending?

Action Tip: If cash flow is tight, look for ways to negotiate vendor terms or automate invoice reminders for faster payments.

2. Profitability Checklist

Revenue is vanity, profit is sanity.

q Are your gross and net profit margins consistent with your industry benchmarks?

q Do you know your most and least profitable products or services?

q Are you regularly reviewing pricing strategies?

q Do you track fixed vs. variable costs monthly?

q Is your break-even point clearly defined?

Action Tip: Run a profitability analysis on each product or service to determine what to scale or cut.

3. Debt Management Checklist

Debt can be a growth tool—or a disaster.

q Do you know your current debt-to-equity ratio?

q Are you making loan payments on time?

q Have you refinanced high-interest debt?

q Do you limit short-term borrowing for long-term investments?

q Is debt part of a broader strategic plan?

Action Tip: Consider working with a financial advisor to optimize your capital structure if debt servicing is affecting cash flow.

4. Budgeting and Forecasting Checklist

A budget isn't just a plan—it's your financial GPS.

q Do you have an annual budget aligned with your business goals?

q Are you tracking actual results against your budget monthly?

q Are forecasts updated quarterly or as conditions change?

q Is your team involved in the budgeting process?

q Do you use financial software to support your budget management?

Action Tip: Use rolling forecasts instead of static annual ones to stay flexible in uncertain environments.

5. Tax and Compliance Checklist

Stay on the right side of the IRS and regulators.

q Are all taxes (income, sales, payroll) filed and paid on time?

q Do you have a tax planning strategy to minimize liabilities?

q Are you taking advantage of all available deductions and credits?

q Are your business licenses and permits current?

q Have you scheduled a mid-year or year-end review with your CPA?

Action Tip: Proactive tax planning can save thousands. Don’t wait until April to talk to your accountant.

6. Financial Reporting & KPIs Checklist

What you don’t measure, you can’t manage.

q Do you generate monthly financial statements (P&L, balance sheet, cash flow)?

q Are you tracking key performance indicators (KPIs) for your industry?

q Do you have a financial dashboard to monitor real-time metrics?

q Is your accounting software up to date?

q Do you understand the story your numbers are telling?

Action Tip: Identify 3-5 financial KPIs that are most critical to your business success and monitor them weekly.

Final Thoughts

Financial health isn’t a one-time check—it’s an ongoing process. These checklists are meant to start conversations, uncover hidden issues, and help you make better decisions.

If you’re feeling overwhelmed, don’t go it alone. As a CPA and advisor to small businesses, I can help you walk through this checklist and create an action plan tailored to your unique situation.

Need a Financial Checkup?
Let’s schedule a complimentary strategy session. Together, we’ll get your business back on track—or take it to the next level.