January is a natural point to step back from the day-to-day and look at how your business is really doing. Not just whether last year felt busy, but whether the numbers behind it are healthy.
A financial health check doesn’t need to be complicated. It’s a set of honest questions about cash, profit, customers, costs and plans. Here are ten we often work through with business owners at the start of the year.
Key points
- Start with cash: how much you have, how much is owed to you and what is due out in the next few months.
- Look at margins product by product or service by service, not just the overall profit figure.
- Check who owes you money, and for how long.
- Review regular costs and contracts, and plan for the tax bills you know are coming.
- Finish with your plans for the year and whether your numbers can support them.
On this page
Cash and cashflow
1. How much cash will you have in three months’ time? Your bank balance today tells you little on its own. A simple forecast of money coming in and going out over the next quarter shows whether a quiet month or a large bill could cause a squeeze.
2. Who owes you money, and for how long? Run an aged debtors report, or simply list unpaid invoices by age. Debts that are a few weeks old are normal. Debts that are months old need action, and they may tell you something about your terms or your customers.
3. Are your own bills paid on time? Paying suppliers late can damage relationships and credit terms. If you are regularly stretching payments, that is a sign your cashflow needs attention.
Profit and margins
4. Which products or services make you the most money? Overall profit can hide a lot. Look at the margin on each main line of work, after the direct costs of delivering it. Some of your busiest work may be your least profitable.
5. When did you last review your prices? If your costs have risen and your prices haven’t, your margins have been quietly shrinking. A regular price review, even a small one, keeps them in line.
Customers and costs
6. How much of your income depends on one or two customers? A large customer is welcome, but if losing them would put the business at risk, it may be time to widen your customer base.
7. Which regular costs could you review? Go through subscriptions, contracts and direct debits. It is easy to keep paying for services you no longer use, or to stay on a contract long after a better option has appeared.
8. Are your tax payments in the diary? Corporation Tax, VAT, PAYE and Self Assessment all have their own dates. Knowing what is due and when, and setting money aside for it, avoids a last-minute scramble. If you file a Self Assessment return, the online deadline for the 2022 to 2023 tax year is 31 January 2024.
Records and plans
9. Are your records up to date? Good decisions depend on good information. If your bookkeeping is weeks or months behind, the figures you are looking at may not reflect where you really are. Up-to-date records also make year-end work quicker and less stressful.
10. What do you want the business to achieve this year, and can your numbers support it? Hiring, moving premises or investing in equipment all need cash and a realistic view of profit. Put rough figures against your plans, then test them against your forecast.
Making the most of the answers
You won’t fix everything at once, and you don’t need to. Pick the two or three answers that worried you most and make a plan for each. Then come back to the same questions in three or six months and see what has changed.
Sources
Our main sources are HMRC and GOV.UK:
Talk to us about your business health check
If you’d like a second pair of eyes on your figures, we can work through these questions with you, using your own accounts and records. Call us on 020 7164 0225, send us a WhatsApp message or email us at info@ibandco.co.uk.
You can also read about our management accounts and strategic and business planning services.
First published 9 January 2024. Tax content checked on 9 October 2026. This article reflects the rules at the date it was first published. Where something has changed since, we’ve added an update note. Rules and rates change, so please check with us before acting.
Please note: this article is general information based on our understanding of UK tax rules at the date shown above. It is not advice for your circumstances, and tax rules and rates can change. Please speak to us before acting on it.
