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Mid-Year Financial Check-In: What Questions Every Business Owner Should Ask
Your sales are up. Business is busy. There is money in the bank.
So, is the business having a good year?
Maybe.
Those are all positive signs, but they do not necessarily tell you how the business is actually performing.
Revenue can increase while profitability declines. A healthy bank balance can hide upcoming tax obligations. Strong sales do not necessarily mean customers are paying quickly enough to support cash flow.
That is why August is a useful time to take a closer look at your finances.
A mid-year financial check-in does not need to be complicated. The goal is to understand where the business stands today, what may be coming next, and whether there are decisions you can make now to put yourself in a stronger position before year-end.
Here are six questions worth asking.
Are We Actually Profitable?
Revenue is often the first number business owners look at, but it is only part of the picture.
If sales have increased by 15%, but expenses have increased by 25%, the business may be busier without becoming more profitable.
Take a look at your year-to-date income statement and compare it with the same period last year, as well as any budget or forecast you created for this year.
Ask:
- Is revenue ahead or behind expectations?
- Has gross margin changed?
- Which expenses have increased significantly?
- Are there recurring expenses that no longer provide enough value?
- Is net income where you expected it to be?
- Are certain products, services, or areas of the business performing better than others?
The goal is not simply to determine whether the business made money. It is to understand where that profit is coming from and whether current performance is sustainable.
If profitability is lower than expected, understanding why gives you an opportunity to make adjustments before year-end.
Where Is the Cash Going?
A profitable business can still experience cash flow problems.
That is because profit and cash are not the same thing.
You may have recorded revenue that customers have not paid yet. You may have purchased inventory, made loan payments, bought equipment, or withdrawn money from the business. All of these can affect the amount of cash actually available.
Review your current cash position and ask:
- Are customers paying on time?
- Are accounts receivable increasing?
- Do we have enough cash to cover upcoming payroll and operating expenses?
- Are large purchases or payments expected in the next few months?
- Are there predictable periods when cash tends to become tight?
This is also a good time to follow up on overdue invoices and review payment terms.
A growing accounts receivable balance can look like strong revenue on paper while creating a very different reality in the bank account.
Are Our Tax Instalments Still Appropriate?
Many businesses make tax instalments throughout the year based on previous tax obligations or estimated current-year income.
But businesses change.
If this year is significantly stronger than last year, your existing instalments may not be enough to cover the eventual tax bill. If business has slowed, the situation may be different.
Either way, it is worth reviewing your current results against what you have already paid.
Ask:
- Are we making all required instalments on time?
- Has our income changed significantly from the assumptions behind those instalments?
- Based on current results, are we likely to owe considerably more at year-end?
- Should we be setting aside additional cash for taxes now?
The objective is not necessarily to calculate your final tax bill in August. It is to reduce the likelihood of an unpleasant surprise later.
Your accountant can help you determine whether your current instalment strategy still makes sense based on how the year is actually unfolding.
What Financial Obligations Are Coming Up?
It is easy to focus on the expenses directly in front of you. A mid-year review should also look ahead.
Depending on your business, the next several months could include:
- GST/HST payments
- Payroll remittances
- Corporate tax instalments
- Loan or financing payments
- Insurance renewals
- Equipment purchases
- Inventory requirements
- Bonuses or additional payroll costs
- Annual subscriptions or contracts
Individually, these expenses may be manageable. When several arrive at the same time, they can put unexpected pressure on cash flow.
Mapping out significant obligations between now and year-end can help you plan for them rather than react to them.
Has Anything Significant Changed in the Business?
Sometimes the most important financial questions are not found in the monthly statements.
Think about what has changed in the business since January.
Have you:
- Hired employees?
- Purchased significant equipment?
- Taken on new financing?
- Added or lost a major customer?
- Expanded into a new market?
- Changed how you pay yourself?
- Introduced a new product or service?
- Made a significant investment in the business?
Changes like these can affect cash flow, taxes, reporting requirements, and year-end planning.
Your accountant cannot help you plan around something they do not know has happened. If the business has changed materially, a conversation before year-end can be much more useful than discovering the implications when the year is already over.
What Would We Like to Do Before Year-End?
A financial review should not only look backward.
Once you understand where the business stands, the next question is what you want the rest of the year to look like.
Perhaps you are considering purchasing equipment, hiring someone, paying down debt, making an investment, or taking more money out of the corporation.
Those decisions can have financial and tax implications, and timing may matter.
Discussing them with your accountant before acting can help you understand the options available and make decisions based on the broader financial picture.
A Mid-Year Review Gives You Time to Act
The value of a mid-year financial review is not simply knowing your numbers. It is being able to do something with that information.
If cash flow is becoming tight, you can address it.
If expenses are climbing, you can investigate why.
If tax obligations are likely to be higher than expected, you can start preparing.
And if the business is performing better than anticipated, you can begin thinking about how best to use that position.
You do not need a perfect forecast for the rest of the year. You need a clear enough picture to make informed decisions about what comes next.
Moving Forward
Financial statements are most valuable when they help you make decisions, not simply when they tell you what has already happened.
A mid-year check-in can help you understand how your business is performing, identify potential issues earlier, and begin year-end planning with fewer surprises.
At Mowbrey Gil, we work with business owners to understand what their numbers mean and plan ahead for taxes, cash flow, and important business decisions.
If you would like to review how your business is performing and start planning for year-end, please reach out to the team today.
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