What Should a Small Business Owner Review Every Month?

1. Review Your Profit & Loss Statement

Your Profit & Loss statement, or P&L, shows your revenue and expenses over a specific period. Start by looking at the current month. Ask questions such as:

• How much revenue did the business generate?
• What were the largest expenses?
• Did the business make a profit or a loss?
• Were any expenses significantly higher than expected?
• Did revenue increase or decrease?

Looking at one month is useful, but comparisons can make the report even more valuable. Consider comparing:

• This month with last month
• This month with the same month last year
• Year-to-date results with the prior year

The goal is not simply to see whether you made a profit. You want to understand why the number changed.

2. Review Your Balance Sheet

Your Balance Sheet gives you a snapshot of your business's financial position at a particular date. It shows your:

Assets — what the business owns or controls Liabilities — what the business owes Equity — the owner's interest in the business

Reviewing your Balance Sheet can help you spot things that may not appear clearly on your P&L. Pay attention to areas such as:

• Cash balances
• Accounts Receivable
• Accounts Payable
• Credit-card balances
• Loans
• Other liabilities
• Owner equity

You should also look for balances that seem unusual or do not make sense.

3. Check Your Bank Balances

Compare the cash balances shown in your bookkeeping records with your actual business bank accounts. Your bank balance is not the same as profit, but it is still important to know how much cash is available. Ask yourself:

• How much cash does the business currently have?
• Is that more or less than last month?
• Are there large upcoming payments?
• Is the business maintaining enough cash for normal operations?

A profitable business can still run into trouble if it does not have enough cash available when bills are due.

4. Make Sure Your Accounts Are Reconciled

Ideally, your major bank and credit-card accounts should be reconciled every month. Reconciliation confirms that the transactions recorded in your books agree with your bank and credit-card statements. This can help identify:

• Missing transactions
• Duplicate transactions
• Incorrect amounts
• Deleted transactions
• Unrecorded fees
• Other discrepancies

If your accounts have not been reconciled, you may want to resolve that before relying heavily on your financial reports.

5. Review Accounts Receivable

If your business invoices customers and allows them to pay later, review your Accounts Receivable. Accounts Receivable represents money customers still owe you. Do not just look at the total balance.

Look at how old the outstanding invoices are. You may have invoices that are:

• Current
• 1–30 days overdue
• 31–60 days overdue
• 61–90 days overdue
• More than 90 days overdue

Older invoices can become increasingly difficult to collect. Regularly reviewing receivables can help you identify customers who may need a payment reminder before invoices become significantly overdue.

6. Review Accounts Payable

Accounts Payable represents money your business owes to vendors and suppliers. Review your outstanding bills and their due dates. Ask:

• What bills are due soon?
• Are any bills overdue?
• Are there bills in QuickBooks that have already been paid?
• Does the business have enough cash available for upcoming payments?

This can help you plan cash needs and avoid surprises. It can also uncover bookkeeping problems if old bills remain outstanding even though you believe they have already been paid.

7. Review Credit-Card Balances

Business credit cards should not be forgotten during your monthly review. Check:

• Current balances
• Recent purchases
• Payments
• Interest charges
• Fees

The balance shown in your bookkeeping system should agree with the credit-card statement after reconciliation. It is also useful to monitor whether credit-card debt is increasing over time.

8. Look for Unusual Expenses

One of the simplest ways to spot potential problems is to look for anything unusual. Maybe advertising expenses suddenly doubled. Maybe software costs are much higher than last month.

Maybe a large transaction appears in office supplies that you do not recognize. Not every unusual transaction is an error. But unusual activity is worth investigating.

Ask yourself:

“Does this number make sense based on what happened in the business this month?”

If the answer is no, take a closer look.

9. Check for Uncategorized Transactions

Transactions sitting in categories such as Uncategorized Expense or Uncategorized Income should generally be reviewed. A handful of recent transactions may simply be waiting for additional information. A large or growing balance can indicate that bookkeeping is falling behind.

Uncategorized transactions can make your financial reports less useful because you cannot clearly see where the money belongs.

10. Look at Revenue Trends

Do not only look at total revenue. Look at how revenue is changing over time.

For example:

A single month's revenue gives you one number. Several months together give you a trend. You may start noticing:

• Seasonal patterns
• Consistent growth
• Declining sales
• Revenue spikes
• Slower periods

These patterns can help you better understand how your business behaves throughout the year.

11. Compare Expenses With Previous Months

Expenses naturally change as a business grows. But you should understand why. If payroll increased because you hired another employee, that makes sense.

If software expenses increased by 50% and you do not know why, that deserves attention. Reviewing expenses over time can help identify:

• Duplicate subscriptions
• Increasing vendor costs
• New recurring expenses
• Unexpected fees
• Areas where spending has changed

Small recurring expenses can become significant when they accumulate.

12. Review Your Major Debts

If your business has loans or lines of credit, check the balances periodically. Know:

• Approximately how much is still owed
• What payments are coming up
• Whether balances are decreasing as expected
• Whether new debt has been added

Your Balance Sheet should reflect these obligations. If the amount shown in your books is significantly different from what your lender reports, the account may need to be reviewed.

13. Ask Whether the Numbers Make Sense

This may be the most valuable part of the entire monthly review.

You know your business. If your financial reports say something that does not match what you experienced during the month, investigate it.

For example:

You know you had your busiest month of the year, but revenue decreased dramatically. You know you paid off a credit card, but the Balance Sheet still shows a large balance. You know a customer paid an invoice, but Accounts Receivable still shows that customer owing money.

Those inconsistencies may indicate bookkeeping issues that need attention.

A Simple Monthly Financial Checklist

At least once a month, consider reviewing:

• Profit & Loss statement
• Balance Sheet
• Bank balances
• Bank reconciliations
• Credit-card reconciliations
• Accounts Receivable
• Accounts Payable
• Outstanding loans
• Uncategorized transactions
• Unusual or unexpected expenses
• Revenue trends
• Major changes from the previous month

You do not need to become an accountant to understand your business's financial reports. The goal is simply to know enough about the numbers to recognize when something looks right—and when something deserves a closer look.

Make It a Monthly Habit

Financial reports become more useful when you review them consistently. Instead of waiting until tax season or until there is a problem, set aside time each month to look at the financial health of your business. Over time, you may begin recognizing patterns that would be difficult to notice from individual transactions or bank balances alone.

Good bookkeeping gives you the information. Regular financial review helps you actually use it. At Palmer Ledger, we help U.S. small businesses maintain accurate QuickBooks Online records, reconcile their accounts, and provide organized monthly financial reports so owners can better understand what is happening in their businesses.