Year-end has a way of arriving quickly. For business owners, it also brings an important opportunity to look beyond the day-to-day and take stock of the financial health of the business.
Before the calendar turns, there are decisions worth considering around cash flow, taxes, major purchases and plans for growth. Some may even need to be made before December 31. Rather than waiting until tax season or the start of a new year, now is a good time to ask a few important questions about your business.
Are Any Major Purchases on the Horizon?
Equipment. Vehicles. Technology. Expansion. If a significant investment is in your plans, consider whether it makes sense to move forward before year end or wait. Tax implications may be part of that conversation, but they shouldn’t be the only consideration. Think about what the purchase will mean for your cash position, operational needs and plans for the year ahead.
It’s also worth considering how you’ll pay for it. Using available cash may seem straightforward, but financing an investment could allow you to preserve liquidity for other business needs. The right timing and funding strategy should support both your immediate needs and your longer-term goals.
Have You Reviewed Your Tax Position?
Changes in revenue, profitability, business expenses or other circumstances throughout the year can affect your tax position. Reviewing your financials with your tax professional before year end can help identify potential adjustments or planning opportunities while there’s still time to act.
The goal isn’t simply to reduce this year’s tax bill. It’s to make informed decisions based on the broader financial picture of your business.
What Will Your Cash Flow Look Like 90 Days From Now?
Your current account balance tells you where you are today. A cash flow forecast can help tell you where you’re going. Look ahead at the next 30, 60 and 90 days. Consider anticipated revenue alongside payroll, taxes, inventory, debt payments, large purchases and other upcoming expenses.
Are seasonal fluctuations coming? Are significant receivables still outstanding? Do you have enough liquidity to cover planned investments or unexpected expenses? Looking ahead can uncover potential gaps before they become problems—and may also reveal opportunities to put excess cash to work more effectively.
Is Your Business Carrying the Right Amount of Cash and Debt?
Year end is also a natural time to take a broader look at your balance sheet. Consider your existing debt, available cash and access to credit. If an opportunity arose tomorrow, would your business have the financial flexibility to act on it? If revenue slowed unexpectedly, would you have adequate liquidity?
There’s no single right answer for every business. The appropriate balance depends on your industry, seasonality, growth plans and risk tolerance. Understanding where you stand now can help you make more intentional decisions about borrowing, saving and investing in the year ahead.
What Worked Financially This Year?
Year-end planning shouldn’t focus only on what needs to change. Take a look at what went right, too. Maybe your business improved profitability, strengthened cash reserves, paid down debt or successfully funded a major investment. Perhaps you improved how quickly customers pay or became more disciplined about forecasting expenses.
Understanding what drove those results can help you determine what to continue—and where there may still be opportunities to improve. The goal isn’t to reinvent your financial strategy every January. It’s to build on what’s working and make thoughtful adjustments where needed.
What Do You Want to Invest in Next Year?
Before setting a revenue target for next year, think about what you want the business to accomplish. Are you planning to hire? Add equipment? Enter a new market? Upgrade technology? Increase inventory? Expand to another location?
Once you’ve identified the priorities, consider what they’ll require financially and how you’ll measure success. That includes determining whether you’ll fund those plans through existing cash flow, available reserves or financing. A goal becomes much more actionable when you understand what it will take to fund it.
Don’t Wait Until January to Start Planning
Year-end financial planning is about more than preparing for tax season. It’s an opportunity to understand where your business stands today and make thoughtful decisions about where you want it to go next. And you don’t have to work through those decisions alone.
Your CPA, financial advisor and banker can each bring a different perspective to the conversation. Bringing your team together before year end can help you evaluate your cash flow, financing needs and growth plans—and enter the new year with a clearer path forward.
Ready to talk about what’s next for your business? Connect with your Core Bank Relationship Manager to start the conversation.
Core Bank does not provide tax, legal, or accounting advice. Consult your independent tax, legal, and accounting advisors before making financial decisions.
