Business Health Check
Answer honestly. You'll get a letter grade plus the three fixes that will move the needle most.
- 01
Your books are reconciled through last month.
- 02
Business and personal finances are in separate accounts.
- 03
You review a P&L and balance sheet every month.
- 04
You have at least 2 months of operating expenses in reserve.
- 05
Fewer than 10% of receivables are 60+ days past due.
- 06
You know your gross margin by service or product line.
- 07
1099s, W-2s, and sales tax filings are current.
- 08
Your net income covers debt payments at least 1.25x.
- 09
You've raised prices or reviewed pricing in the last 12 months.
- 10
Two people (or you + software) approve/review all payments.
What a business financial health check measures
A financial health check is a structured review of the systems that produce your numbers, not just the numbers themselves. It asks whether the books are current, whether cash is protected, whether pricing has been reviewed, whether debt is serviceable, and whether basic controls exist. Those five areas predict most of the financial trouble small businesses run into, and all of them are fixable once you can see them.
The ten questions above are the ones we work through in a first client conversation. Each is a yes-or-no about a control that either exists or does not — no estimates, no judgment calls. The grade you receive is a snapshot of operating discipline, and the flagged items form a short, ordered list of what to fix first.
The five areas the check covers
Books and reporting
Reconciled through last month, separate business and personal accounts, and a P&L and balance sheet you actually read each month.
Cash and receivables
At least two months of operating expenses in reserve, and fewer than 10% of receivables sitting past 60 days.
Profit, debt, and controls
Known margin by line, income covering debt payments at 1.25x, current tax filings, reviewed pricing, and a second set of eyes on payments.
How to read your score
Books first, always
Every other answer depends on this one. If the accounts are not reconciled, your margin, reserve, and coverage figures are estimates dressed up as facts. Fix the books before you act on anything else the check flags.
Two failures in the same area compound
Unreconciled books plus commingled accounts is not two problems, it is one deep one. The same is true of thin reserves plus slow receivables — the second guarantees the first.
A strong score is a lending position
Current books, a real reserve, clean filings, and 1.25x coverage are exactly what an underwriter checks. Businesses that score well here tend to get financed quickly when the opportunity comes.
Frequently asked questions
+What is a financial health check for a small business?
A structured review of bookkeeping accuracy, cash position, receivables, profitability, debt coverage, tax compliance, and internal controls. It identifies which financial systems are missing or failing so they can be prioritized, rather than waiting for tax season to reveal them.
+How often should I review my business finances?
Review the P&L and balance sheet monthly once the books are reconciled, check cash weekly, and run a full health check quarterly. Annual review is too infrequent to catch a problem while it is still cheap to fix.
+What are the warning signs of financial trouble?
Books more than a month behind, growing receivables while cash falls, using a credit line for payroll, no idea what gross margin is by service line, late tax filings, and prices unchanged for more than a year while costs rose.
+How much cash reserve should a business hold?
Two to three months of operating expenses for most small businesses, and more for seasonal work or contractors carrying retainage. The point is to be able to absorb a slow month or a late customer without borrowing.
+What should I fix first if I score poorly?
Reconcile the books and separate business from personal accounts. Nearly every other item — margin, coverage, tax readiness — depends on having accurate records, so that work pays for itself repeatedly.
Want the flagged items handled?
We start with a catch-up and cleanup so the books are reconciled and trustworthy, then set up a monthly close that keeps them that way. Most clients see every item on their flagged list resolved within the first two cycles.
Want us to review these numbers with you?
Share a few details and we'll follow up within one business day with tailored next steps — no pressure, no obligation.
Need this done for you?
This calculator is only as accurate as the books behind it. Here's where to go next.
- Monthly bookkeeping & cleanup servicesDone-for-you books, reconciled monthly, with financials a lender can read.Open Monthly bookkeeping & cleanup services
- Industries we serveContractors, law firms, real estate, retail, and health & wellness practices.Open Industries we serve
- Bookkeeping in Houston, TXLocal support across Houston and the surrounding service areas.Open Bookkeeping in Houston, TX