How a Quarterly Review Helps Me Understand My Business Finances: A Step-by-Step Guide

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Conducting a quarterly review of your finances can provide critical insights into your business's financial health and guide your future decisions.

To help you with the process, I wanted to share my review process with you.

Here's a Step-By-Step Guide

Step 1

Keep Your Bookkeeping Up-to-Date

Before you start, ensure that your bookkeeping is up-to-date. This ensures the reports you pull are accurate.

Step 2

Pull Reports

• Once your bookkeeping is up-to-date, pull the following reports:

• Profit and Loss Report customized for the last quarter compared to the same quarter the previous year.

• Quickbooks Online Instructions: Customize the report by clicking Reports > Profit and Loss > Last Quarter > Customize to compare to the previous year and check mark $ change and % change.

• Now, change the customization and uncheck the past year, and check the boxes on the past period to see how the last quarter did compared to the previous quarter.

• Pull up a Profit and Loss report for the last quarter and display columns by month to see what happened each month of the previous quarter.

• Bonus: Review your Balance Sheet compared to previous periods to see changes there.

Step 3

Ask Yourself Some Questions

• After analyzing the reports, ask yourself the following questions:

• Are your sales up or down? Why?

• Are your expenses up or down? Why?

• Look at the categories that have the largest change.

• Identify the biggest chunks that make up the difference in income and expenses.

Step 4

Write a Narrative

Write a narrative of what happened to understand and capture what the numbers are telling you. Here's an example:

"Compared to the same quarter in the previous year, sales are down $20,743 from the first quarter last year due to bonuses received from clients in 2022 that weren't received in 2023. One client downsized their company, so their price decreased - $2,250. The rest of the difference equals roughly the monthly retainers for clients released - $2,615.”

Step 5

Congratulate yourself!

Congratulations on spending time with your numbers so you can use them to your benefit. Understanding the past helps predict the future, where you can affect change. The past has already happened. All we can do now is learn from it.

In conclusion, conducting a quarterly review of your finances helps you understand your business's financial health and guide your future decisions.

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