Why your business needs a finance health check

Aug 26, 2022 | Uncategorized

It may sound obvious, but it’s worth emphasising: when running a business, you should always pay close attention to the state of your finances. This is especially true for start-ups. In the early days of a company, money is likely to be tight, so it’s essential to know exactly where you stand.

We know that this is easier said than done. With so much to think about, you may struggle to find the time for a proper examination of your books. This is where a finance health check comes in.

An external accountant can take an in-depth look at your finances, spotting things you may have missed and leaving you free to focus on running your business. Here’s our guide to finance health checks, and how they can help you to stay on track.

What is a finance health check?

A finance health check is like an MOT for your company. It’s a thorough evaluation of your finances, usually carried out by an experienced bookkeeper or accountant. They will look at your business’s current state and flag any inefficiency areas. They will also assess your future prospects, offering advice on improving your long-term profitability.

The exact content of your health check will depend on the nature of your business, but it will usually cover these areas, using techniques like cash flow forecasting and management accounting:

  • Your profit margins and how they have changed over time. Low or falling profit margins may be a sign of inefficiency within your business.
  • The state of your balance sheet. If your outgoings are greater than your income, you will need to make some changes to avoid insolvency.
  • The proportion of your income that is needed to cover your costs. If this figure is falling, it suggests that your business is in good shape for the future.
  • How much you spend on overheads. It can be a ripe area for savings if you haven’t reviewed this in a while.
  • Your cash flow. Do you have enough money on hand to pay your suppliers, or do you often keep them waiting?
  • Your performance compared to your competitors. Can you learn anything from their approach to the business?
  • Your recent tax returns. Are you missing out on any valuable tax breaks or deductions?

What are the benefits of a finance health check?

Whatever stage you’re at with your business, there are many benefits to a finance health check:

  • It gives you a better idea of where your money is going. An external examiner may spot unnecessary spending you have missed, allowing you to save significantly.
  • It can act as an early warning system. If profits are beginning to decline, a finance health check gives you a chance to turn things around before it’s too late.
  • It helps you avoid costly penalties by ensuring your taxes are in order.
  • It helps you to prepare for the future. A finance health check will include a forecast of upcoming profits and expenses, allowing you to set realistic short-term and long-term goals.


A clean bill of health 

A finance health check is a small expense with big benefits. Improving efficiency and reducing losses will often end up paying for itself. Best of all, it will give you peace of mind that your business is doing everything possible to succeed.

We’ve carried out dozens of finance health checks for companies of all shapes and sizes. We’d love to help you too, so give us a call to get started.

Get in touch with our team today.

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