August Financial Review: A Mid-Year Pulse Check for Your Business

It's a good time for business owners to take a close look at their finances and see how things are going since August is halfway through the year. It's vital to do a financial review midway through the year so you can see how your business is doing and make any changes that need to be made to make sure the rest of the year goes as well as possible. A business financial review is a key component of your growth, whether you want to boost your cash flow, keep an eye on your profits, or adjust your financial plan.

This post will talk about the most critical aspects of a good financial review and why your firm should make it a top priority this August. 

Why is it Important to do a Financial Review of your Business?

A financial review in the middle of the year gives you more than just an idea of how your firm is performing. You can use it to find out how much money you have, what risks you might face, and where you could do better. Looking at your company's performance halfway through the year might help you figure out what is and isn't working and where improvements might be needed. 

Here are some significant reasons to have a financial review:

• More control over financial flow: Look for any gaps in your money flow and rectify them so that they don't happen again.
• Choosing better: The information in the review can help you figure out how to spend, save, and invest your money.
• How to plan for taxes: You may prepare for the following tax season and find ways to minimise your tax payment by reviewing your tax returns in the middle of the year.
• Changes to your company plan: You can change your business plan to better meet your goals for the rest of the year, depending on what you learnt.

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Now that you know how vital it is to check your finances, let's talk about the specific things you should pay attention to when you conduct your August pulse check.  

Key Areas to Focus on During Your Business Financial Review  

1. Statement of Profit and Loss (P&L)

The profit and loss statement (P&L) is one of the most crucial papers you may use to see how well your business is doing with money.  It shows you how much money you made, spent, and made over a certain amount of time, usually a quarter or a year.  

When you check your accounts, be sure to pay particular attention to:

• Revenue Trends:  Are your sales what you expected them to be?  If not, try to find strategies to cut down on spending too much or boost sales.
• Expenses: Are there places where you are spending too much?  Find ways to save money, acquire better prices from suppliers, or get rid of extra charges that aren't needed.
• Profitability: Are you on schedule to reach your goals for making money?  If not, think about how you could boost your profits by lowering costs, raising prices, or coming up with new ways to make money.

You can tell if you're on track to reach your financial goals or if you need to change your plan for the rest of the year by looking at your P&L.

2. Cash Flow Analysis

It's crucial to know how money comes in and goes out of your business because cash flow is important for all businesses.  If you have cash flow problems, your firm may not grow as quickly, and it may be harder to hire workers, pay your bills, or invest in new enterprises. 

When you look over your finances, you should consider the following when you complete a cash flow analysis: 

• Inflow vs. Outflow:  Are you getting your money on time?  Do you have any clients whose bills are past due and need to be paid?  Are there any expenses that can be delayed or cut?
• Predicting Cash Flow:  Your P&L statement might assist you in figuring out how much money you'll make for the rest of the year.  Plan for any months when your cash flow might decline so you know you have the money to pay your bills.
• Debt Management:  Do you owe too much money?  Check your payment plan to determine whether you can pay off some of your debt in the second half of the year.

A cash flow analysis helps you get ready for times when you won't have enough money so that your firm can keep running properly.

3. Balance Sheet Review

The balance sheet of your business shows you how much money it has at a certain time.  It shows you your assets, debts, and equity, which helps you figure out how financially healthy your business is.  When you look over your balance sheet, pay attention to the following:

• Assets:  Are you making money from your property?  Do you have any assets that you don't use enough that you can sell or use?
• Liabilities: What do you owe, and when do you plan to pay it off?  If you want to improve your cash flow, you might want to think about restructuring your debt or securing better terms for paying it back.
• Equity: Does your business have enough equity, or do you need to invest more money to help it develop or expand?

You can tell if your business is financially sound and using its resources well by looking at its balance sheet.

4. Tax Planning and Deductions

One of the most crucial things you need to do in August to get your finances in order is to plan your taxes.  You can lower your tax payment this year by looking at your finances.  When you make plans for your taxes, keep these points in mind:

• Tax Deductions:  Have you taken advantage of all the tax breaks that are available to you?  This might mean things like writing off company expenses, depreciation on assets, using your automobile for work, and home office deductions.
• Tax Obligations:  Are you on schedule to pay your taxes?  If not, change the way you spend your money so that you have enough saved.
• Superannuation Contributions:  You might want to think about making your own superannuation payments to lower your taxable income and increase your retirement savings.

If you get ready ahead of time, you might be able to pay less in taxes and avoid the last-minute rush when tax season comes around.

5. Budget vs. Actual Performance

Check how well you fared relative to the budget you made at the beginning of the year.  You can use this comparison to see what you're doing right and what you need to work on.

• Adjust Budget Allocation:  You might want to think about moving money around to keep your business on track for the second half of the year if you've gone over budget in some areas.
• Performance Gaps:  To reach your financial goals, find and fix everything that isn't working.

You may adjust your financial plan and keep on track with your goals by looking at your budget and how well you're doing.

6. Future Financial Goals and Forecasting

Finally, use your financial evaluation to make clear financial goals for the rest of the year.  You may stay motivated and on track by setting specific financial goals, such as paying off debt, producing more money, increasing sales, or expanding your business.

Revenue Growth: Set realistic goals for how much money you want to make to boost sales and profits.

Managing costs:  Find strategies to cut costs and increase production.

Investment: Think about how you can pay for your business's expansion, whether that means hiring additional people, getting new technology, or advertising.

Forecasting lets you make choices and plans that will keep your firm going for a long time. 

Conclusion 

In August, it's crucial to undertake a financial review to find out how well your firm is doing, what it needs to do better, and how to get set for a successful second half of the year.  If you take the time to look at your P&L, cash flow, balance sheet, tax planning, and budget, you can be sure that your business is on the right financial track.

Ashman's Accounting can help you go over your business's finances.  Our knowledgeable accountants can help you figure out what's wrong with your finances right now and establish plans for how to expand your money.

Call Ashmans Accounting right away to schedule your mid-year financial review. This will help you make sure your business stays on pace for success.

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