Business Health Check and Internal Financial Statements

Sales may be growing, yet cash in the bank does not increase. The business may report a profit while still struggling to pay suppliers, collect receivables, or fund its next stage of growth.

These issues are not always visible from a bank balance or a single accounting report. Effective business decisions require information that has been organized, reconciled, analyzed, and explained in a format management can use.

TaxPoint’s Business Health Check and Management Accounts Services bring together relevant accounting, financial, and operational information to help business owners identify strengths, warning signs, and areas requiring structured improvement.

What Is a Business Health Check?

A Business Health Check analyzes relevant accounting, financial, and operational information to assess important areas of the business, including:

• Profitability and the quality of revenue

• Liquidity and working-capital requirements

• Receivable collection and supplier payment cycles

• Inventory management and product costs

• Expense structure and break-even performance

• Debt obligations and repayment capacity

• Completeness of accounting records

• Process risks and internal controls

The scope is tailored to the nature of the business, management’s objectives, and the information available. It does not need to follow the same format for every organization.

This service is a management analysis. It is not an audit or review engagement and does not provide assurance by an auditor unless a separate assurance engagement is agreed.

How Can Management Accounts Help?

Management Accounts are internal financial reports prepared to help management monitor performance and make decisions without waiting for the annual financial statement closing process.

Reports may be prepared monthly, quarterly, or according to an agreed timetable. Their structure may also be adapted by branch, department, project, sales channel, or product group.

Management Accounts can help explain which activities generate profit, which expenses are increasing, where cash is tied up, which customers have overdue balances, and whether the business has sufficient resources for its upcoming plans.

However, Management Accounts are internal reports. They do not replace statutory annual financial statements, an external audit or certification, statutory filing with government authorities, or tax-return obligations.

What Do We Review and Analyze?

1. Revenue, Gross Margin, and Quality of Earnings

We analyze revenue, cost of sales, gross profit, and margin trends to determine whether an increase in sales is producing sustainable financial results.

Where sufficient information is available, the analysis may be divided by product, service, branch, project, customer, or sales channel.

2. Expenses and Break-Even Performance

We review fixed costs, variable costs, and unusual expense movements to help management understand the level of sales required and identify areas where better cost control may be possible.

3. Cash Flow and Liquidity

Accounting profit does not always mean that a business has sufficient cash. We analyze receipts, payments, short-term obligations, and working-capital needs to identify potential liquidity gaps.

4. Accounts Receivable and Accounts Payable

We review outstanding balances, receivable aging, collection periods, and supplier payment terms to help reduce overdue balances and improve the cash-conversion cycle.

5. Inventory and Product Costs

The review may cover fast-moving products, slow-moving inventory, stock shortages, and the consistency between accounting records and actual operating processes.

For businesses with warehouses, manufacturing activities, or multiple product categories, an on-site review of receiving, storage, issuing, and recording procedures may be arranged within the agreed scope.

6. Liabilities, Assets, and Commitments

We review loans, repayment obligations, fixed assets, and balances involving directors or related parties so that the accounting information can more appropriately reflect the position of the business.

7. Accounting Documents and Tax Readiness

We examine the completeness and connection between income records, expense documents, tax invoices, withholding-tax certificates, and payment evidence.

Well-organized information can support timely tax preparation and the appropriate use of lawful tax benefits. Actual tax outcomes depend on the facts and circumstances of each business.

8. Workflows and Internal Controls

We assess risk points within sales, purchasing, receipt, payment, inventory, and approval processes. Recommendations may cover the separation of duties, supporting documents, approval controls, and review procedures.

Reports the Business May Receive

The reporting package depends on the agreed scope, accounting system, and availability of information. It may include:

• Internal profit and loss statement

• Internal statement of financial position

• Cash-flow summary and cash-flow forecast

• Accounts receivable and payable aging reports

• Inventory and stock-turnover reports

• Profitability analysis by product, branch, project, or channel

• Budget-versus-actual analysis

• Key performance indicators or a management dashboard

• Summary of findings, priorities, and an initial action plan

Reports are prepared from the information and documents supplied by the business. The detail and reliability of the analysis therefore depend on the quality and completeness of those records.

Our Service Process

Step 1: Understand the Business and Its Objectives

We discuss the business model, current concerns, existing processes, and the information management needs for decision-making.

Step 2: Define the Scope and Reporting Cycle

We agree on the entities or departments to be covered, the accounting period, report format, frequency, and whether the work will be remote, on-site, or hybrid.

Step 3: Collect and Review Information

Accounting-system data, supporting documents, bank transactions, and reports from relevant departments are collected and reviewed for initial consistency.

Step 4: Reconcile and Organize the Records

Important balances are reconciled, transactions are categorized, opening figures are reviewed, and missing or inconsistent information is identified.

Step 5: Analyze and Prepare Reports

Management Accounts, supporting schedules, and agreed performance indicators are prepared, together with an analysis of significant changes.

Step 6: Present the Findings and Improvement Plan

We explain the reports to management, prioritize important issues, and recommend practical actions that can be monitored.

Step 7: Provide Ongoing Follow-Up

For monthly or quarterly engagements, important figures and issues can be monitored regularly so that the reports continue to develop with the business.

Documents and Information to Prepare

Required information varies according to the engagement but may include:

• Trial balance and general ledger

• Bank statements

• Sales, purchasing, receipt, and payment reports

• Accounts receivable and payable details

• Inventory reports

• Fixed-asset register

• Payroll and wage information

• Relevant tax returns and tax reports

• Loan, lease, and other material agreements

• Management budgets or business targets

TaxPoint can provide a tailored information request after assessing the business and its objectives.

Who Is This Service For?

• SME owners who need financial information during the year

• Rapidly growing businesses with increasing transaction volumes

• Profitable businesses experiencing cash-flow pressure

• Businesses with substantial receivables or inventory

• Companies without a full-time accounting or finance manager

• Management teams requiring reports by branch, project, or product

• Businesses preparing for financing, investment, or expansion

• Organizations seeking stronger documentation and internal controls

Flexible Service Arrangements

TaxPoint can provide remote, on-site, or hybrid support. On-site personnel and visit frequency depend on the location, volume of work, availability of information, and agreed engagement scope.

Outsourced Accounting and Finance Support may reduce the need for a full-time senior finance position. Actual cost benefits and suitability depend on the size of the business, workload, and existing systems.

Important Information Before Engaging the Service

• A Business Health Check is not an audit, financial statement review, due diligence engagement, or business valuation.

• Management Accounts do not replace statutory annual financial statements, an external audit, DBD e-Filing, or tax-return obligations.

• Reports and recommendations depend on the records, documents, and explanations supplied by the business.

• The analysis does not guarantee profitability, liquidity, financing approval, or a particular amount of tax saving.

• Accounting, tax, audit, or specialized advisory work outside the agreed scope requires a separate agreement.

Turn Accounting Information into a Business Management Tool

Accounting information should not exist only for tax filing or year-end compliance. It should help management understand where the business stands, which risks require attention, and what decisions should be made next.

Let TaxPoint support your accounting and financial management. We help organize your information, prepare Management Accounts, and present complex figures in a format that is easier to understand and use.

Contact TaxPoint for a free initial consultation and to define a Business Health Check scope that suits your organization.