Why a Monthly Review Matters
Most business owners check their bank balance and call it financial management. That’s like checking your car’s speedometer and ignoring the fuel gauge, oil light, and temperature warning.
A monthly financial review takes 30-60 minutes and gives you a clear, honest picture of your business health. It’s the single best habit you can build as a business owner.
The Monthly Financial Review Checklist
Reconcile Your Accounts
- Match your bank statements to your bookkeeping records
- Check for missing transactions — anything in the bank that’s not in your books?
- Investigate discrepancies — don’t just adjust and move on; understand why they exist
Review Your Profit and Loss
- Compare to last month and the same month last year. Are revenue and expenses trending in the right direction?
- Check your gross margin. Is it stable, improving, or declining?
- Look at each expense category. Is anything growing faster than expected?
- Calculate your net profit margin. What percentage of revenue are you actually keeping?
Check Your Cash Position
- How much cash do you have right now?
- What’s coming in over the next 30 days? (Check accounts receivable)
- What’s going out over the next 30 days? (Check accounts payable and upcoming bills)
- Can you cover the next 2-3 months of expenses if revenue dropped unexpectedly?
Review Accounts Receivable
- Pull your aging report. How much is overdue?
- Follow up on anything past 30 days.
- Identify repeat offenders. Consider changing their payment terms.
Review Accounts Payable
- Are all bills recorded?
- Is anything overdue? Pay it before it incurs late fees.
- Take advantage of early payment discounts where available.
Check Your Tax Obligations
- Are your tax instalments up to date?
- Is your sales tax / GST / VAT collected and set aside?
- Any upcoming filing deadlines this month?
Key Metrics to Track
These numbers give you a quick pulse on your business:
Revenue Growth
(This Month’s Revenue - Last Month’s Revenue) / Last Month’s Revenue x 100
Is your business growing, plateauing, or declining?
Net Profit Margin
Net Profit / Revenue x 100
How much of every dollar earned do you actually keep? For most small businesses, 10-20% is healthy.
Current Ratio
Current Assets / Current Liabilities
Can you cover your short-term obligations? Above 1.5 is comfortable; below 1 is concerning.
Accounts Receivable Days
(Accounts Receivable / Revenue) x Days in Period
How long does it take to collect payment on average? Lower is better.
Operating Expense Ratio
Operating Expenses / Revenue x 100
What percentage of your revenue goes to overhead? Track this over time to spot creep.
Warning Signs to Watch For
Pay attention if you notice any of these patterns:
- Revenue is flat or declining for three consecutive months
- Expenses are growing faster than revenue — your margins are being squeezed
- Cash balance is trending down even though the P&L shows profit — check your receivables
- Accounts receivable keeps growing — clients are taking longer to pay, or you have bad debts building up
- You’re relying on one or two clients for most of your revenue — that’s a concentration risk
- Tax obligations are piling up — this can snowball quickly with penalties and interest
- You’re consistently dipping into savings or personal funds to cover business expenses
- Your gross margin is shrinking — your costs are rising faster than your prices
Make It a Habit
Block 30-60 minutes on the same day each month — the first Monday, the last Friday, whatever works for you. Treat it like a non-negotiable appointment with your business.
Fastbooks makes this review straightforward by keeping all your reports, metrics, and data in one place. Open the dashboard, work through the checklist, and you’ll finish each month knowing exactly where your business stands.