A mid-year financial checkup can give you the chance to pause, reflect on the first half of the year, and make prudent adjustments for the months ahead. Businesses that make this kind of review a regular habit often handle challenges more effectively and move faster when new opportunities arise.
This post will break down why mid-year financial check-ins matter and highlight the key areas you should review during this important checkup.
Inventory Management
If products sit on the shelves too long, they can quietly drain your cash and reduce your profits. A mid-year review is therefore a good time to take a closer look at how much stock you’re carrying, how quickly items are selling, and how often you’re placing orders.
For example, if you’re ordering too much, that money could be better used elsewhere, like paying down debt or funding new projects. On the flip side, if you’re constantly running out of key items, you could be missing sales and frustrating your customers.
A few smart changes, like adjusting reorder points, cutting back on slow sellers, or matching your orders more closely to actual demand, can free up cash and keep your operations running smoothly. Faster inventory turnover means more money available for the things that help your business grow.
Cash Flow Optimization
Keeping your cash flow healthy means planning ahead. With the help of qualified financial advisors, you can build rolling projections that extend several weeks or even months into the future. These forecasts show when money is expected to come in and go out so you can spot potential issues before they happen.
If you see a cash shortfall coming, you’ll have time to take action, such as:
- Encouraging faster customer payments
- Working out better payment terms with suppliers
- Setting up a short-term loan
Making changes early rather than reacting at the last minute allows you to stay in control. This kind of planning can help ensure that you can cover your bills and also have cash available for new opportunities in the second half of the year.
Debt Management
Mid-year is a good time to take a fresh look at all the debt your business carries, from credit lines and equipment financing to mortgages and credit‐card balances. Your Fractional CFO can help you review each loan’s interest rate, payment schedule, and effect on your cash flow. This kind of review often uncovers ways to save money.
For example, you might be able to refinance a loan at a lower interest rate, combine a few debts into one easier payment, or focus on paying off the most expensive debt first. In some situations, keeping low-interest debt and using your cash for something with a better return, like growing the business or building up savings, can be a sensible move.
Instead of just thinking about debt as something to get rid of, it can help to think of it as part of your overall strategy. Managing your debt wisely can support your organization’s financial health and long-term growth.
Tax-Planning Considerations
After the halfway point, you’ll be in a better position to look at your taxes while there’s still time to make strategic moves to lower your bill. This is also the time to explore any tax deductions and credits your business might qualify for, both at the federal and state levels. Some of these benefits are easy to miss if you wait until the end of the year.
Other helpful mid-year tax strategies include:
- Deciding when to record income or expenses for the best tax savings
- Reviewing how your business handles depreciation on things like equipment
- Making sure your estimated tax payments are on track
Getting ahead on tax planning now can help you avoid surprises later and may even save your business money before the year ends.
Partner With Trusted Professionals to Drive Profit and Find Clarity
As your company grows, managing the financial side of things becomes more complex and more critical. That’s where Zabel & Co can step in.
As your Outsourced CFO, we can help you understand your margins, improve your cash flow, eliminate unnecessary spending, and position your business for sustainable growth. To learn more about how we can support your goals, contact us today.