Mid-Summer Cash Flow Check: Is Your Business Financially Healthy?

We're deep into summer now, and if you haven't looked at your business finances since June, it's time for a cash flow check. Even if everything feels fine, a quick review can reveal opportunities — or problems — before they become urgent. Here's a simple cash flow health check you can do in under an hour.

First: Understand the Difference Between Cash Flow and Profit

This trips up a lot of business owners. Profit is what's left after you subtract expenses from revenue — it's an accounting number. Cash flow is the actual movement of money in and out of your business account — it's what keeps the lights on. You can be profitable on paper and still run out of cash. This happens when clients are slow to pay, when you've paid for inventory or expenses upfront, or when growth is outpacing your collections.

The Mid-Summer Cash Flow Checkup

1. Look at your bank balance trend Pull up the last 90 days of your business bank account. Is the balance trending up, down, or flat? A downward trend even during a profitable period is a warning sign worth investigating.

2. Review your accounts receivable How much do your clients owe you right now? How old are those invoices? Anything over 30 days should get a follow-up. Anything over 60 days needs a firm conversation. Uncollected revenue is the most common cause of cash flow problems.

3. Check your upcoming obligations What bills, payroll, loan payments, or tax payments are due in the next 60 days? Map them out and make sure your expected income covers them with room to spare.

4. Calculate your cash flow runway Divide your current cash balance by your average monthly expenses. The result is how many months you could operate with zero new revenue. Most financial advisors recommend at least 3 months of runway for small businesses.

5. Identify your biggest cash drains Look at your top 5 expense categories. Are any of them higher than expected? Are there subscriptions, services, or vendor relationships that could be renegotiated or eliminated?

What to Do If Your Cash Flow Needs Work

Don't panic — most cash flow problems are fixable with a clear plan. Invoice immediately upon delivering work or products. Offer a small discount for early payment. Set up a business line of credit before you need it. Review and tighten your payment terms. Consider a deposit or retainer structure for new clients.

We're Here to Help

Cash flow management is one of the most valuable things a good bookkeeper does for your business. At MeiDay Accounting, we keep your numbers clean and give you the visibility you need to make smart decisions. Let's talk — meidayaccounting.com.