A structured look at where a business actually stands — margins, cash, key ratios, and whether the records underneath them can be relied on at all. Here is what a proper one covers.
Run the free version →Most financial health checks start with ratios. That's the wrong end.
Every ratio is calculated from the bookkeeping. If revenue is recognised when the cash arrives rather than when the work is done, if the quarterly electricity bill lands in one month instead of three, if the annual insurance is expensed in January — then your margin, your current ratio and your profit are all describing a business that doesn't exist.
So a proper health check runs in two stages. Are the records reliable? Then, what do they say?
If several of these fail, stop. Fixing the records is the whole job, and any analysis built on them until then is decoration.
| Measure | What it tells you | What to look for |
|---|---|---|
| Gross margin | Whether you make money on what you sell | The trend matters more than the number. A margin drifting down over six months is the earliest warning you get |
| Net margin | Whether the whole operation makes money | Compare against the same months last year, not against last month |
| Debtor days | How long customers take to pay | Rising debtor days with flat sales means collection is slipping, not that you are growing |
| Creditor days | How long you take to pay suppliers | Rising sharply is often the first visible sign of a cash problem |
| Current ratio | Short-term assets against short-term liabilities | Below 1 means the next twelve months' obligations exceed the resources to meet them |
| Cash runway | Months of cover at current burn | The single most useful number for an owner, and the one least often calculated |
| Revenue concentration | Share of turnover from the largest customer | Above roughly a third, the business has a dependency rather than a customer |
Annually as a minimum. Sooner if something material has changed — first employees, VAT registration, losing a significant customer — and always before someone else looks at your numbers. A lender, an investor or a buyer will run their own version. Better to find what they'll find, first.
An audit is a statutory process with defined standards and a formal opinion, carried out by a registered auditor. A health check has no opinion and no filing — it exists for the owner, not for a regulator. Diagnostic, not assurance. The two are often confused, and the difference matters if anyone ever asks what you relied on.
If you'd rather have it done properly, we run a full financial health check as part of the free initial review — the last twelve months, both stages, with a written plain-English report and a walkthrough call. Yours to act on however you like, including taking it to your existing accountant.
The free Bookkeeping Health Check scores your books out of 100 and shows exactly what's wrong. No login, nothing uploaded, no obligation.
Run the free Health Check → Or book a 30-minute initial review