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Navigating Mid-Year Financial Reviews for Your Business

The employer is conducting a mid-year financial review with his employees.

Conducting a mid-year financial review uncovers where a business stands, revealing a company’s financial health and reorienting owners toward their goals. This comprehensive review looks at investments, debts, budgets, and insurance. It offers a chance to reassess goals, adjust financial plans, and begin tax planning. It enables a company to assess how they have done and make decisions for the rest of the fiscal year. 

The Benefits of a Mid-Year Financial Review

Undertaking a mid-year financial review is beneficial for an organization. A mid-year review:

  • Enables spotting risks and/or opportunities: The middle of the fiscal year is a great time to assess your company’s performance. It allows you to discover assets/sectors that performed well and warrant additional investment. It also reveals underperforming areas that drain financial resources and require strategic divestment or reallocation. 
  • Encourages the adjustment of financial goals: Goals set at the beginning of the fiscal year may no longer be appropriate for your company’s current situation or the economic landscape. A mid-year financial review allows you to adjust your business goals, ensuring they remain achievable and realistic. This comprehensive review acts as a roadmap for the rest of the year. 
  • Assists in tax planning: Tax planning is crucial for all businesses. A mid-year review identifies tax-saving possibilities, encouraging tax-saving strategies.

Enables budget realignment: A mid-year review reveals whether your company’s budget supports your current financial goals. It helps a business decide whether to adjust its spending patterns or reallocate funds. It helps ensure all funds contribute towards your financial objectives.

Steps for Conducting a Mid-Year Financial Review

  • Clarify your objectives: The first step in the mid-year review process is to create objectives. Make them specific, achievable, measurable, time-bound, and relevant. They act as benchmarks for your review.
  • Assess financial performance: Review/analyze income statements, cash flow statements, and balance sheets. Evaluate revenue, expense, and profit margins. Look for discrepancies and cost-cutting possibilities. 
  • Review the budget: Compare the company’s budget with actual income and spending. Look for any variances (overspending, underutilizing saving strategies, etc.). Adjust the budget to align with your financial goals, taking into consideration unexpected expenses and changes in income. 
  • Evaluate investments: Examine investment performance (bonds, real estate, stocks, etc.), accounting for the current market conditions and your financial goals. 
  • Undertake debt management: Assess current debts (loans, leases, mortgages, outstanding accounts payable, business credit card balances, line of credit, etc.). Look at repayment terms and interest rates. Adjust repayment strategies where necessary. 
  • Examine emergency funds: Ensure your emergency fund can cover three to six months of expenses. Prioritize contributions.
  • Analyze processes and operations: Review supply chain/vendor relationships and inventory management. Assess production/service delivery for bottlenecks or possibilities for productivity enhancement. Look for ways to simplify operations or reduce costs. 
  • Evaluate marketing and sales: Examine conversion rates, sales performance, and customer acquisition costs. Look at offline and online campaigns, website analytics, and social media presence. Identify areas that need adjustment. 
  • Revisit your business strategy and plan: Assess projections/assumptions. Keep in mind current market trends/conditions. Identify areas that require adjustment (marketing strategies, target audience, product offering, etc.).
  • Reset goals: Use the results/insights of your mid-year review to reset actionable goals and make informed decisions.

How Your Accountant Can Help

There are many ways your accountant can assist with the mid-year review.

A mid-year business review is valuable for gaining insights into performance, adjusting strategies, and making informed decisions. Assessing financials, operations, sales, marketing efforts, employee performance, customer satisfaction, and business plans helps identify areas for improvement and encourages actionable goals. 

Need help with a mid-year business review? Are you looking for advice regarding business strategy, tax planning, financial planning, risk management, or regulation/tax compliance? Contact Cook and Company professional accountants. They provide services for a variety of privately owned/managed companies.

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The employer is conducting a mid-year financial review with his employees.