The short answer
Reviewing profit, cash flow, and key expenses each month helps business owners stay on top of performance and financial health.
At minimum, review three things every month: your profit and loss, your cash flow, and a few key metrics like wages and cost of goods compared with previous months. Ask how profitable you were, whether your bank balance will cover the next few weeks, and what changed and why. Keeping it simple and consistent is what makes it work.
1. Profit and loss: how did we perform?
Look at revenue, costs and net profit for the month. Compare it with the same month last year and with your budget. Ask:
Did revenue go up or down, and why?
Is profit where you expected?
Are any expense lines unusually high?
2. Cash flow: where did the money go?
Profit isn’t cash. Check cash in versus cash out for the month and the net movement in your bank balance. Then look forward:
Will the current balance cover wages, rent and suppliers over the next few weeks?
Is a BAS, super or tax payment coming up?
Are customers paying on time? Check Aged Receivables.
3. Key metrics: what changed?
Pick a handful of numbers that matter for your industry and compare them month to month:
Wage costs as a percentage of revenue
Cost of goods sold or direct costs as a percentage of revenue
Gross margin
Debtors outstanding over 30 days
Revenue per service or location, if you use tracking
If something moves, find out why. A jump in wage costs might be overtime, a new hire or a pricing problem.
How long should it take?
Thirty to sixty minutes, once your bookkeeping is up to date. A bookkeeper can prepare a one-page summary so you only need to review and decide.
A typical Melbourne scenario
A Northcote café owner started a 45-minute monthly review with her bookkeeper. In the third month, wage costs jumped from 32% to 39% of revenue. The cause was extra weekend shifts that weren’t matched by sales. She adjusted the roster, and wages were back to 33% the following month, saving around $4,000.
Key takeaways
Review profit and loss, cash flow and key metrics every month.
Compare with previous months to spot changes early.
Ask why every number moved.
Keep it simple, consistent and based on clean books.
General information only.
Read important financial reports for business owners and how often business owners should look at their numbers, or see our small business bookkeeping and virtual CFO services.
Marissa has over eight years of bookkeeping experience and a genuine passion for helping businesses take control of their finances. She's proactive, precise, and committed to making bookkeeping easy, accurate, and stress-free for every client she works with. Whether it's reconciling accounts, tracking cash flow, or streamlining financial systems, she's across the detail so you don't have to be.
