Is it time for a financial health check?
Like servicing your vehicle or having a check-up with your doctor, a financial health check is essential as it reveals the status of your company’s bottom line. In other words, it shows if you are doing well financially or if there are any signs of financial deterioration.
Not having a detailed understanding of your numbers, can hide potential issues and upcoming problems with:
1. Cash flow – Critical to your business, the earlier you can forecast cash flow problems, the earlier you can address them.
2. Profitability – A financial health check provides a detailed picture of the profitability of your products and services. It can highlight underperforming elements of your business and help you to make informed and smart commercial decisions.
3. Margins – Do you want to take on new staff but you don’t know the financial implications of doing so? Or are you looking to expand your operation? Or you may have excess capacity and resources, that you don’t know about?
A financial health check addresses problems before they become bigger. As with most problems, the sooner they’re addressed the better. It also identifies opportunities well in advance.
But how exactly can you measure your company’s financial health? Check out our guide below.
How to assess your financial health
1. Evaluate your financial statements
Your key financial statements consisting of the balance sheet, income statement, and cash flow statement contain rich information about your company’s business activities and financial performance over a specific reporting period.
2. Review non-financial areas of your business
Non-financial business elements like the quality of your company’s leadership, management and corporate governance can also affect your financial health. By evaluating their financial implications, you can develop effective solutions based on your available financial data.
3. Research external factors with financial impacts
It’s also vital to consider the financial impacts of various external events such as market conditions and regulatory changes when assessing the status of your company’s bottom line.
4. Talk to us
If it has been a while since your last financial health check (or if you are yet to conduct one), it may be time to do so.
CMPartners can provide expert assistance and advice in conducting your financial health check, so feel free to contact your Partner or Associate.
Our team of professionals can help you prepare the necessary information, conduct a financial health check for you and draw meaningful conclusions from it.
To contact us visit https://cmpca.com.au/contact-us/