As year end approaches, it is easy to focus on finishing strong, closing deals, completing projects, and hitting revenue targets. But growth alone does not tell you how healthy your business really is.
Before the year closes, CEOs should take a step back and identify the financial risks that could affect cash flow, profitability, and the ability to start the next year on solid footing.
A year-end financial review is not just about looking backward. It is about making better decisions before the year is over.
CEO’s Guide: 5 Financial Risks to Review Before Year-End
1. Know Where Your Cash Stands
Profit on the income statement does not always mean cash is available in the bank.
Review your current cash position, upcoming obligations, outstanding receivables, payroll, taxes, and major vendor payments. Then look ahead, not just at what you owe today, but what could require cash over the next 30 to 90 days.
✍🏻CEO action: Review a short term cash flow forecast and identify any periods where cash could become tight.
2. Look for Margin Erosion
Revenue may be growing while profitability quietly declines.
For project based businesses, review which jobs, clients, or service lines are actually generating healthy margins. Pay attention to cost overruns, unbilled work, change orders, labor costs, and projects that are taking more resources than expected.
✍🏻CEO action: Identify your most and least profitable projects and understand what is driving the difference.
3. Review Receivables
Outstanding invoices can become a major year end risk if they continue aging.
Review your accounts receivable by customer and aging category. Do not just look at the total balance, identify which invoices are overdue, why they remain unpaid, and what action is needed to collect them.
✍🏻CEO action: Create a plan for your largest or oldest outstanding balances before year-end.
3. Review Your Upcoming Tax Obligations
Taxes should never be a last minute surprise.
Work with your accounting and tax advisors to understand your expected tax position and upcoming obligations. This is also a good time to review whether estimated payments, deductions, equipment purchases, or other year end decisions could affect your tax strategy.
✍🏻CEO action: Ask your tax professional what decisions need to be made before December 31, not after.
4. Review Receivables
Outstanding invoices can become a major year end risk if they continue aging.
Review your accounts receivable by customer and aging category. Do not just look at the total balance, identify which invoices are overdue, why they remain unpaid, and what action is needed to collect them.
✍🏻CEO action: Create a plan for your largest or oldest outstanding balances before year-end.
5. Stress-Test the Business for the Year Ahead
The strongest year end review looks beyond December.
What happens if revenue comes in lower than expected? What if a major customer pays late? What if labor or material costs increase? What if you take on a large project that requires significant upfront cash?
You do not need to predict every scenario. You need to understand how much financial flexibility your business has.
✍🏻CEO action: Identify your biggest financial vulnerability and determine what you can do now to reduce it.
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Thanks,Shahona