Kickstart 2025: Financial health checks for your business
13/01/2025As the new year begins, it’s the perfect time for businesses to take a step back and assess their financial health. Conducting a thorough financial health check can help identify opportunities, mitigate risks, and set your business on the right path for the year ahead. Here’s how you can review key areas such as cash flow, tax planning, and budgets to ensure a successful 2025.
Review your cash flow
Cash flow is the lifeblood of any business. Start by reviewing your cash flow statements to understand how money is moving through your business. Key steps include:
- Analyse patterns: Identify trends in income and expenses over the past year. Are there seasonal fluctuations or periods of strain?
- Forecast for the year: Use past data to predict cash flow for the coming months. Factor in any known changes, such as increased costs or new revenue streams.
- Improve liquidity: Ensure you have enough working capital to cover day-to-day expenses. Consider renegotiating payment terms with suppliers or customers to improve cash flow.
Assess your tax planning strategy
Tax planning is not just about meeting deadlines; it’s about optimising your financial position. Start 2025 with a proactive approach:
- Check your tax reliefs: Are you making use of all available allowances and deductions? This could include R&D tax credits, capital allowances, or other industry-specific reliefs.
- Plan for key dates: Mark important tax deadlines, such as VAT returns and corporation tax payments, to avoid penalties.
- Review dividend payments: If you’re a director and shareholder, assess whether your dividend strategy aligns with your tax efficiency goals.
Refine your budget
A well-thought-out budget is essential for tracking performance and making informed decisions. To refine your budget for 2025:
- Evaluate last year’s performance: Compare last year’s budget with actual figures. Where did you overspend or underspend?
- Set realistic goals: Establish achievable financial targets for revenue, profit margins, and expenses.
- Plan for uncertainty: Build a contingency fund into your budget to prepare for unexpected costs or economic changes.
Strengthen financial controls
Ensure your financial processes are robust and capable of supporting growth:
- Internally audit your accounts: Conduct regular internal audits to detect errors or inefficiencies.
- Update systems: If you’re using outdated accounting software, consider upgrading to a system that offers real-time insights and automation.
- Engage your team: Provide training for staff on financial best practices and fraud prevention.
Seek professional advice
Sometimes, the best way to ensure your business’s financial health is to consult an expert. We can help:
- Identify tax-saving opportunities
- Provide insights into financial forecasts
- Offer tailored advice to meet your business goals
Start 2025 on solid ground
A financial health check doesn’t just identify problems – it reveals opportunities for growth and improvement. By reviewing your cash flow, refining your tax planning, and setting a solid budget, you’ll be in a strong position to navigate challenges and seize opportunities in 2025. Act today and make this year your most successful yet.