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Evaluate Your Bookkeeping: A 5-Point Financial Health Check

Here’s an experiment to enlighten your business insights.

Grab a pen, breathe deep, and assess your bookkeeping through these five pointed questions.

Five questions—that’s all it takes.

Don’t dismiss this lightly, thinking, “My books are solid.” Continue reading, as even perfectly managed businesses often find surprises lurking beneath the surface—instances of cashflow inefficiencies, pricing discrepancies, overlooked tax benefits, and growth constraints that can escalate into costly challenges.

Prepared? Let’s start.

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Understanding Your Score

Award yourself 0–5 points for each question.

  • 0 = Not at all

  • 5 = Without fail, monthly

Total your score: 0–25 points. Remember, this test is about gaining clarity, not casting judgment.

Question 1: Are your financials consistently closed each month?

Think of a monthly close as essential hygiene for your business. Neglect it once, perhaps okay; twice, and you’re relying on intuition instead of facts.

A disciplined monthly close ensures you have:

  • Reliable, clean financial records

  • Dependable reporting

  • No guesswork

  • Early problem detection

If you're months behind—or if bookkeeping feels enigmatic—score low here.

Score yourself: 0–5.

Question 2: Do you intimately know your gross profit margin?

If revenue keeps the lights on, your gross profit margin is your paycheck. Operating blind without this knowledge means you can't resolve pricing or staffing issues effectively.

Successful companies understand and continuously improve their margins.

Score yourself: 0–5.

Image 2

Question 3: Are you aware of your breakeven and cash on hand?

This question serves as a critical stress test for fiscal security, differentiating between restful nights and insomnia.

Do you know:

  • Your required sales to break even?

  • Your available cash days?

  • Your ability to manage unexpected slowdowns or expenses?

If these seem uncertain, reassess where your business stands.

Score yourself: 0–5.

Question 4: Does your financial reporting reveal trends and KPIs?

Expense reports are useful, but comprehensive reports that highlight trends and KPIs are revolutionary.

Trends depict patterns; KPIs indicate wellness. Together, they empower you to steer your business confidently.

If your reports do not interpret meaning beyond listing, evaluate this area honestly.

Score yourself: 0–5.

Question 5: Do you employ budget and cashflow forecasts?

Forecasts transform financials from mere records into navigational tools.

A budget directs financial flow, while a cashflow forecast ensures enduring sustainability.

Absent these frameworks, you are managing reactively, precipitating unpredictability and higher costs.

Score yourself: 0–5.

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Evaluating Your Score

0–10 points: Financial Firefighting

You maintain operations, yet it’s more strenuous than necessary. This stage is ripe for rapid advancement.

11–17 points: Stability with Reactivity

You’re stable but missing out on potential efficiencies. Enhancing margins, cash, and reports can enhance performance.

18–22 points: Healthy with Room for Growth

Solid fundamentals that encourage growth and profitability. Refinements can further augment outcomes.

23–25 points: CFO-Level Mastery

Your operations resemble a finely-tuned machine, establishing a basis for scalable success.

Improve Your Score with Our Expert Help

Most entrepreneurs need enhanced clarity, not more data. We can assist in refining your bookkeeping, advancing reports, and building meaningful forecasts.

Your financial records should prop up growth, not just function as a best guess. Let’s optimize them to your benefit.

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