Most business owners have a vague sense of how the business is doing. They know if it "feels" busy. They know roughly what came in last month. They check the bank account and feel okay or not okay.
What they don't have is a clear, monthly picture of the five numbers that actually determine business health.
This five-question audit takes five minutes if your books are in order. If it takes longer, that's useful information too.
Question 1: What did you actually collect last month?
Not what you invoiced. Not what you were owed. What actually landed in the bank.
Revenue on paper doesn't pay salaries. Cash collected does. If there's a consistent gap between what you invoice and what you collect — that's a receivables problem, and it compounds fast.
What good looks like: Collections within 30 days of invoicing, DSO (days sales outstanding) below 35.
What to act on: More than 15% of revenue sitting in 30+ day receivables, or any invoice over 60 days.
Question 2: What did you actually spend?
Total outgoings — payroll, suppliers, software, rent, everything. Not estimates. Actual categorised spend from your bank and credit card reconciliation.
Most business owners consistently underestimate expenses because they don't see them all in one place. Subscriptions quietly compound. Supplier invoices hit in lumps. You only notice when the margin looks wrong.
What good looks like: Spend reconciled to the penny, every month, by the 5th.
What to act on: Any category of spend that's more than 10% above the same month last year without a clear reason.
Question 3: What's your gross margin?
Revenue minus direct costs (cost of goods sold, direct labour, subcontractors). Not net margin — that comes later. Just: what percentage of revenue is left after you've paid for the work?
This is the most important number in most service businesses and the one most commonly ignored in favour of looking at the bank balance.
What good looks like: Gross margin consistent month-on-month. Service businesses typically 40–70%.
What to act on: Margin trending down over 3+ months. Usually means pricing hasn't kept up with costs, or a project is running over.
Question 4: What's your cash runway?
Take your current cash balance. Subtract your average monthly outgoings. How many months can you run if revenue stops tomorrow?
This isn't pessimism — it's essential knowledge. Businesses that fail usually saw it coming in the cash flow numbers 3–6 months before it became a crisis. Most just weren't looking.
What good looks like: 3+ months of runway at all times.
What to act on: Runway below 6 weeks. That requires immediate action on receivables, expenses, or funding.
Question 5: Are you on track for the year?
Take year-to-date revenue. Divide by the number of months elapsed. Multiply by 12. Compare to your annual target.
This simple projection tells you whether you're ahead, behind, or on track — before Q4 arrives and it's too late to course correct.
What good looks like: YTD run rate at or above target.
What to act on: Run rate more than 15% below target by month 4. That's a go-to-market problem, not an accounting one.
Why most people can't answer these in five minutes
If any of these questions took you more than a minute to answer, the issue isn't the question — it's that your books aren't current.
Books that close on the 5th of the following month, properly reconciled and categorised, make this audit trivial. You open Xero, pull five numbers, and you know exactly where you stand.
Books that are two months behind, partially categorised, with unexplained transactions in "suspense" — those books are costing you more than just the accountant's time.
What to do with this
Run this audit monthly. Put it in your calendar for the 7th of each month — after the previous month is closed.
If the numbers look wrong, you want to know on the 7th — not when your accountant calls in November.
If you'd rather have someone else do the close and send you a monthly report, that's what Deplexify's Accounting service provides. Books closed by the 5th, P&L and cash position delivered to you, anomalies flagged.
You still make the decisions. We just make sure you have the right numbers to make them.
Questions about your Xero setup or monthly close process? Get in touch — we're happy to take a look at what you've got.