Mid-Year Financial Checkup - Is Your Business On Track for the year?

Why Mid-Year Reviews Matter More Than Year-End Scrambles

June is the perfect time for your own financial checkup. You've got six months of real data to analyze and six months left to make changes. Here's exactly how to evaluate where your business stands and what to do about it.

Most business owners wait until December (or worse, March) to look at their numbers seriously. By then, it's too late to make meaningful changes.

A mid-year review gives you time to course-correct. If your profit margins are shrinking, you can adjust pricing. If cash flow is tight, you can improve collection processes. If tax liability is building up, you can make strategic moves to reduce it.

For businesses in northeast Texas, mid-year is especially important because many have seasonal patterns. Construction slows in extreme heat, landscaping shifts focus, and retail prepares for holiday seasons. Understanding your mid-year position helps you plan for these changes.

Most importantly, mid-year reviews help you make the second half of the year your strongest yet, instead of just hoping things work out.

Your Mid-Year Financial Health Check

1. Profit Analysis: Are You Actually Making Money?

Start with your Profit & Loss statement for January through May. Don't just look at the bottom line, dig into the details.

Compare to Last Year: How does your year-to-date profit compare to the same period last year? Are you trending up, down, or flat?

More importantly, look at your profit margin trends by month. If January showed 25% profit margins and May showed 18%, something's changing that needs attention.

Revenue per Customer Analysis: Calculate your average job value or customer revenue. Has it increased, decreased, or stayed the same?

For service businesses, this might mean comparing average invoice amounts. For contractors, it could be average project values. For consultants, average retainer or project fees.

Expense Category Review: Which expense categories have grown faster than your revenue? Common problem areas include:

• Vehicle expenses (fuel, maintenance, insurance)
• Materials and supplies
• Subcontractor costs
• Insurance premiums
• Software subscriptions and fees

Red Flags to Watch For:

• Declining profit margins month-over-month
• Revenue growth that's slower than expense growth
• Large expense categories you can't easily explain
• Profit that doesn't match your actual cash position

2. Cash Flow Reality Check

Your profit statement tells one story, but your bank account tells another. Both matter, but cash flow determines whether you can pay bills and invest in growth.

Cash Position Analysis: Look at your bank balances over the past six months. Are you consistently higher or lower than the same period last year?

More importantly, what's your cash flow pattern? Do you have predictable low points that stress your finances?

Accounts Receivable Deep Dive: Run an A/R Aging report and be honest about what you see:

• How much money do customers owe you?
• How long are they taking to pay on average?
• Which customers consistently pay late?
• How much of your A/R is over 60 days old?

For many service businesses, slow-paying customers are the biggest cash flow problem. If you're owed more than two months of average sales, collection issues are limiting your growth.

Equipment and Capital Needs: What equipment purchases or major expenses are you planning for the rest of the year?

Summer is often when businesses invest in new vehicles, tools, or equipment for busy seasons. Make sure your cash flow can handle these investments without creating crisis situations.

3. Tax Planning and Quarterly Payments

Nothing ruins a good year like an unexpected tax bill in April. Mid-year is when you can still make moves to manage your tax liability.

Estimated Tax Payment Review: Are you current on quarterly estimated payments? If you've been making the same quarterly payments as last year but your income has increased significantly, you're likely underpaying.

Calculate your expected annual tax liability based on current income trends. If you're behind, you can catch up with larger Q3 and Q4 payments.

Tax Strategy Opportunities: Mid-year is prime time for tax planning moves:

• Equipment purchases that qualify for Section 179 deductions
• Business vehicle purchases or upgrades
• Retirement plan contributions
• Business expense timing to maximize current-year deductions

Texas-Specific Considerations: Don't forget about franchise tax requirements for Texas businesses. While we don't have state income tax, businesses with revenue over $2.47 million need to file franchise tax returns as of 2024. (https://comptroller.texas.gov/taxes/franchise/)

Sales tax compliance is another mid-year review item. Are you current on all filings? Any changes in your business that affect sales tax obligations?

4. Bookkeeping System Performance

Your bookkeeping system should make your life easier, not harder. Mid-year is a good time to evaluate whether your current system is working.

Data Quality Check:

• Are you current on transaction categorization?
• When was the last time you reconciled all accounts?
• Do your reports actually help you make business decisions?
• Are you spending excessive time on bookkeeping tasks?

Common Mid-Year Bookkeeping Problems:

• Months of unreconciled bank accounts
• Hundreds of uncategorized transactions
• Mixed personal and business expenses
• Duplicate, missing, or incorrect customer/vendor entries
• Sales tax calculations that don't match actual filings

System Efficiency Review:

• How long does it take you to get basic financial reports?
• Can you easily see profitability by job, customer, or service type?
• Do you have visibility into cash flow trends and forecasts?
• Is invoice creation and payment tracking streamlined?

If getting basic answers about your business finances takes hours of work, your system needs improvement.

Industry-Specific Mid-Year Checkpoints

Service Businesses (Plumbing, Electrical, HVAC)

Summer Planning Essentials: Review your capacity for fall busy season. Do you need additional vehicles, equipment, or team members?

Analyze job profitability by type. Which services generate the best margins? Which ones consistently cost more than estimated?

Check your customer base diversification. Are you too dependent on residential or commercial work? Summer is a good time to develop the other segment.

Cash Flow Considerations: Summer often brings air conditioning emergencies and outdoor electrical work. Are you positioned to handle the cash flow from busy periods?

Review your emergency service pricing. Hot weather creates premium opportunities if your systems can handle them.

Construction and Contractors

Project Pipeline Analysis: What does your work pipeline look like through year-end? Summer is prime building season in Texas, but fall often brings weather concerns.

Review profit margins by project type and size. Are larger jobs more or less profitable than smaller ones?

Check your subcontractor relationships and capacity. Can your regular subs handle your planned work volume?

Equipment and Vehicle Needs: Summer heat is hard on vehicles and equipment. Plan for maintenance, repairs, and replacements before busy fall seasons.

Seasonal Businesses (Landscaping, Pool Services, Retail)

Peak Season Performance: How did your spring season compare to expectations? What lessons learned should influence fall planning?

Inventory analysis for retailers: What's moving well? What's sitting too long? Plan fall ordering based on actual spring performance.

Cash Management: Are you setting aside money from busy periods to cover slower seasons? Summer profits often need to last through winter months.

Review your seasonal service offerings. Can you add year-round revenue streams to smooth cash flow?

The Mid-Year Action Plan

Immediate Actions (This Week)

Generate Key Reports:

• Profit & Loss for January-May vs same period last year
• Balance Sheet showing current assets and liabilities
• A/R Aging report showing customer payment patterns
• Cash flow summary showing monthly ending balances

Quick Financial Health Indicators:

• Calculate current cash runway (months of expenses you can cover)
• Determine your average collection period (days from invoice to payment)
• Review major expense categories for unusual increases
• Check estimated tax payment status

Short-Term Improvements (Next 30 Days)

Collection Process Enhancement:

• Call all customers with balances over 45 days
• Implement systematic follow-up procedures for overdue accounts
• Consider payment incentives for faster collection
• Review credit terms for problematic customers

Expense Management:

• Audit recurring monthly expenses for unnecessary subscriptions
• Negotiate better terms with major suppliers
• Review insurance coverage and rates
• Optimize vehicle and equipment expenses

System Improvements:

• Catch up on bank reconciliations through May
• Categorize any uncategorized transactions
• Clean up duplicate customer and vendor entries
• Set up automated processes for routine tasks

Strategic Planning (Next 90 Days)

Tax Planning Implementation:

• Meet with your accountant or tax preparer to review tax projections
• Plan any major equipment purchases for maximum tax benefit
• Adjust quarterly estimated payments if needed
• Implement tax-saving strategies while there's still time

Cash Flow Optimization:

• Create cash flow forecasts through year-end
• Plan for seasonal business patterns
• Build cash reserves for known slower periods
• Improve working capital management

Business Growth Preparation:

• Analyze most profitable customer and service types
• Plan capacity increases for busy seasons
• Develop new revenue streams for slower periods
• Strengthen operational systems to handle growth

Red Flags That Demand Immediate Attention

Cash Flow Warning Signs

Immediate Concerns:

• Bank balances consistently lower than same time last year
• Using credit cards to pay routine business expenses
• Delaying vendor payments to meet payroll
• Unable to take advantage of early payment discounts

Developing Problems:

• Accounts receivable growing faster than sales
• Customers taking longer to pay on average
• Seasonal cash flow cycles becoming more extreme
• Equipment maintenance being deferred due to cash concerns

Profitability Problems

Margin Compression:

• Profit percentages declining month over month
• Revenue growth slower than expense growth
• Increased competition forcing price reductions
• Material and labor costs rising faster than pricing adjustments

Operational Issues:

• Job costs consistently exceeding estimates
• Excessive rework or warranty claims
• Inefficient use of labor and materials
• Poor project management affecting profitability

System and Process Failures

Bookkeeping Breakdown:

• More than one month behind on reconciliations
• Spending excessive time on financial tasks
• Unable to quickly generate accurate reports
• Tax compliance issues or penalties

Business Management Problems:

• Making decisions without current financial information
• Surprising tax liabilities or cash shortfalls
• Inability to assess job or customer profitability
• Poor visibility into business performance trends

Creating Your Second-Half Success Plan

Revenue Optimization Strategies

Pricing Review and Adjustment: If your costs have increased but your prices haven't, mid-year is the time to make adjustments. Gradual price increases are easier for customers to accept than large year-end jumps.

Analyze your most profitable services and focus on growing those areas. Working less on low-margin jobs and more on high-margin ones improves both profit and cash flow. But sometimes, the low margin jobs lead to high margin jobs, so make sure to include that in your decision making.

Customer Base Development: Review your customer concentration. If too much revenue comes from a few large customers, develop strategies to diversify your base.

Consider which customers pay fastest and provide the best margins. Focus your marketing and sales efforts on attracting similar customers.

Operational Efficiency Improvements

Process Optimization: Summer often provides opportunities to improve systems and processes without disrupting busy seasons.

Review your job costing accuracy. Are estimates consistently high or low? Better estimating improves both profitability and customer relationships.

Technology and Equipment: Evaluate whether current tools and technology support your business efficiently. Sometimes small investments in software or equipment generate significant time savings.

Financial Management Enhancement

Cash Flow Management: Implement weekly cash flow forecasting if you haven't already. Knowing what's coming helps you make better decisions about spending and collections.

Create separate savings for taxes, equipment replacement, and seasonal needs. This prevents cash crunches from predictable expenses.

Banking and Credit Relationships: Review your banking relationships and credit facilities. If growth requires additional working capital, establish credit lines before you need them.

Consider whether current banking arrangements support your business efficiently. Better payment processing, remote deposit, or integrated bookkeeping might improve operations.

Technology and System Improvements

Bookkeeping Software Optimization

QuickBooks Health Check: If you're using QuickBooks, mid-year is perfect for cleanup and optimization:

• Clean up your chart of accounts
• Update customer and vendor information
• Implement automation features you haven't used

Integration Opportunities: Consider connecting your bookkeeping software with other business systems:

• Payment processing for faster collection
• Time tracking for better job costing
• Inventory management for product businesses
• CRM integration for customer management

Process Automation

Routine Task Automation: Identify bookkeeping tasks that consume excessive time and consider automation:

• Bank transaction categorization rules
• Recurring invoice generation
• Payment reminder systems
• Report generation and distribution

Mobile Capabilities: For field-based businesses, mobile access to financial information can improve decision-making and cash flow:

• Mobile payment acceptance
• Field expense tracking
• Real-time job cost updates
• Customer payment status access

Professional Help: When and Why

Signs It's Time for Professional Support

Bookkeeping Overwhelm:

• Spending more than 3-4 hours monthly on bookkeeping
• Consistently behind on reconciliations and categorization
• Making errors that affect tax filings or business decisions
• Unable to generate reports that help run your business

Growth Management:

• Revenue increasing but systems not keeping pace
• Need for more sophisticated financial analysis
• Complex tax situations requiring professional guidance
• Expansion plans requiring detailed financial planning

Crisis Prevention:

• History of year-end tax surprises
• Cash flow problems despite profitability
• Poor visibility into business performance
• Compliance issues with tax or regulatory requirements

What Professional Help Looks Like

Bookkeeping Services: Monthly bookkeeping services typically include transaction categorization, bank reconciliations, financial report generation, and accounts receivable management.

This frees you to focus on running your business while ensuring financial information is accurate and current.

Fractional CFO & Financial Advisory: Beyond basic bookkeeping, advisory services help with tax planning, cash flow management, business growth planning, and operational improvements.

For growing businesses, this strategic support pays for itself through better decisions and improved profitability.

Cleanup and Setup: If your current financial situation is confusing or behind, professional cleanup services can get you back on track quickly.

This often includes software setup, historical cleanup, process implementation, and maintaining good systems going forward.

Your Mid-Year Decision Point

Mid-year financial checkups aren't just about reviewing numbers, they're about taking control of your business trajectory.

At midyear, you have six months to make the most of your business. You can spend them reacting to financial surprises, or you can spend them executing a plan.

The businesses that win are the ones that use mid-year as a launch pad.

Action Steps for This Week:

1. Generate your key financial reports - P&L, Balance Sheet, A/R Aging
2. Calculate your key metrics - profit margins, cash runway, collection periods
3. Identify your biggest opportunity - better collections, improved margins, cash flow management
4. Make one immediate improvement - call overdue customers, update pricing, clean up bookkeeping
5. Plan your Q3 and Q4 strategy - based on what the numbers tell you

Getting Professional Support

If this mid-year review reveals problems that feel overwhelming, or if you're ready to optimize your financial management systems, professional help can accelerate your progress significantly.

We work with small businesses throughout Quinlan, Hunt County, Rockwall, and the Dallas area, helping business owners use their financial information to make better decisions and achieve stronger results.

As local bookkeepers, we understand the seasonal patterns, customer behaviors, and operational challenges facing northeast Texas businesses.

Whether you need bookkeeping cleanup, ongoing monthly services, or strategic financial planning, we can help you finish the year stronger than you started it.

Ready to take control of your business finances and finish the year strong? Contact us here to schedule your professional mid-year financial review and create your plan for an exceptional second half.