Seven financial numbers every small-business owner should review monthly

A monthly financial review does not have to be long. What makes it useful is doing it on the same day every month, with the same numbers, so you notice direction rather than a single data point.

The seven numbers - Revenue for the month, next to the same month last year. - Gross margin: revenue minus the direct costs of delivering the work, as a percentage. - Fixed overhead: rent, software, insurance, admin salaries — the costs that arrive whether you sell or not. - Net profit for the month and year to date. - Cash on hand, and how many weeks of overhead it covers. - Accounts receivable, split into current, 30, 60 and 90+ days. - Owner pay and draws, so you can see what the business actually returns to you.

How to run the review in thirty minutes - Confirm the books are closed: bank and card accounts reconciled, no uncategorized transactions. - Read the profit and loss statement by month, not just the year total. Trends live in the columns. - Write down the two biggest changes from last month and one sentence explaining each. - Pick one action. One. "Call the two customers over 60 days" beats a list of ten intentions.

Reading the numbers together Revenue alone can mislead. Rising revenue with falling gross margin usually means pricing or job costing slipped. Flat revenue with rising overhead quietly eats the profit. Healthy profit with weak cash points to collections or inventory. The value comes from the combination.

Common traps - Comparing to a budget nobody updated since January. - Judging a seasonal business against last month instead of the same month last year. - Treating one strong month as a trend. - Reviewing reports built on books that are not reconciled — then the review measures the bookkeeping, not the business.

If closing the month is the part that never happens, that is what a monthly plan is for. Our plans include monthly bookkeeping and financial reports, and higher tiers add review meetings where we walk through these numbers with you. Book a free bookkeeping assessment to get started.