These several checks help you to see how your business is performing, and to anticipate issues before they become problems,  So, you stay on top of your finances, have control of your strategy, and base decisions on facts rather than guesswork.

Accounts Receivable   (or who owes you money?)

An aged debtor report is part of any standard accounting software.  It tells you how much you have invoiced, which customers have not paid, and when those moneys are due for collection.

Check this weekly as it will tell you what is likely to be collected in the next few weeks, easing some of your concerns over cash flow, and also who has missed payment.  Chase these early using a process that works for you;  for repeat offenders it may be time to reconsider whether you should do business with them at all.

Cashflow Activity

Look over your cashflow regularly, at least monthly.  It gives you a good overview of what was received and spent.  It's not perfect, but it tells you that you're covering your costs and what's left over.

Each year, you should prepare Profit & Cash Forecasts (two different reports).  Compare your Cash Forecast to the actual cashflow from your software;  you can see if you have enough cash in the bank for quarterly GST and Superannuation, tax instalments, capital expenditure, perhaps a reserve.  Update the Forecast for apparent trends.  You may also need to generate more income in the short-term if actual results are behind plan.

Profit & Loss Report (P&L)

The P&L shows sales and costs, it may be on the cash basis, but it may also be prepared including sales on account and purchases on credit (Accrual basis).  Accruals allows a detailed look at the business's profitability, and can be compared to your Profit Forecast.

If profit (income less all costs but excluding income tax) is below forecast or lower than you'd like, investigate options like cost-cutting, raising prices, review your marketing, reducing waste, buying practices, etc.  We're looking for patterns or trends that tell us things are on (or off) track so we can confidently plan ahead.

Stay on Top of Tax(es)

BAS (GST), IAS (Instalments of income tax) and employee super are payable quarterly.  These outgoings need to be in your Annual Cash Forecast, and monitored monthly in your cashflow review to ensure the money is available to pay them when due.

Income tax is due around May each year, less Instalments paid.  If profit improves, set aside some additional tax (or even contribute it to your super, why just give it to the tax office?).  If profit falls, vary your Instalments if the measures to turn profits around will take some time.

Know which Projects/Clients are worth your time

When you quote make sure you know what your costs are (from Profit & Loss and Profit Forecast) and also allow for a contingency.  When you're doing the job, ensure all costs are taken up.  Otherwise, the job might look profitable on paper, but the cashflow won't 'look' right.

If you don't record all of the costs and overheads, you'll never know which projects are worth going after or are likely to be a drain on your resources.  Use a spreadsheet or software for quoting/job control/analysis (eg., see the add-ons in XERO).

Accounting Software

Everyone was forced into software when GST was introduced, and it seems a lot of the software is only used to compile BAS for the tax office.  Too many bookkeepers are just processing paperwork in order to comply with BAS requirements.  If the information is not accurate, it may not be corrected until the income tax returns are finally prepared and then you may find out there was a serious problem.  Don't just do things to give the tax office money, use the power of the software to get accurate, timely and useful reports.