How to Conduct a Mid-Year Revenue Health Check

Reviewing your financial performance halfway through the financial year is the best way to avoid surprises when tax season rolls around. Most tradies are too busy on the tools to look at their bank balance until it is time to pay a BAS, but waiting that long is a recipe for missed opportunities. Taking just an hour to sit down with your bookkeeping reports can reveal if your margins are shrinking or if your overheads have crept up unexpectedly.

Start by comparing your actual revenue against the targets you set at the start of the year. If you find that your actual income is lower than projected, analyze which specific jobs or service areas are underperforming. Sometimes, you might discover that certain types of jobs are costing you more in materials and time than you originally estimated, eating away at your profit buffer.

Next, take a look at your outstanding invoices and the age of your accounts receivable. If you have too many clients stretching their payment terms, your cash flow will be tight regardless of how much work you have in the pipeline. Now is the perfect time to tighten your payment terms or implement a more aggressive follow-up process for overdue invoices to ensure you have cash in the bank for the second half of the year.

Finally, check your current tax provisions against your actual profit. If you have had an unexpectedly busy year, your initial estimates for GST and income tax might be too low, putting you at risk of a large debt. Adjusting your savings strategy now helps keep your business stable and allows you to make informed decisions about future investments like new tools or hiring an additional apprentice.