Cash Flow Metric Breakdown: 6 Financial Checkpoints for July
July Is the New January (for Smart Business Owners)
We’re halfway through the year—and if you’re like most small business owners, Q1 flew by, Q2 was packed with projects and payroll, and suddenly, here we are in July. Mid-year is the perfect time to pause, reflect, and realign your numbers with your business goals. And when it comes to planning a profitable Q3, your cash flow metric is one of the most important tools in your toolkit.
This blog walks you through six essential financial checkpoints to review this month. They’ll give you a pulse on your business health, help you spot issues early, and give you real clarity for smarter decisions in the second half of the year.
Let’s break down what to look for—and how each number helps you move forward with purpose.
Net Profit Margin: Are You Actually Making Money?
A busy business isn’t always a profitable one. That’s why one of the first places to check in July is your net profit margin—the percentage of revenue that remains after all expenses are paid.
What to review: Pull your year-to-date Profit & Loss report and calculate the percentage of net income compared to total revenue.
Why it matters: This number shows you how efficiently you’re running your business. If revenue is up but profit isn’t, it’s a sign that expenses may be creeping in or pricing needs to be revisited.
Pro tip: Compare your current margin to the same period last year to spot long-term trends—especially if your team or overhead has grown.
Cash Flow Health: Is Your Business Running on Empty?
You can be profitable on paper and still run out of money. That’s where your cash flow metric comes in. Cash flow tracks the real-time movement of money in and out of your business—and gives you a true sense of financial health.
What to review: Look at your monthly cash flow statements and note the difference between cash in vs. cash out.
Why it matters: Strong sales mean little if you don’t have cash to cover payroll, pay vendors, or invest in growth. Cash flow is also one of the first things lenders or investors will look at when evaluating your financial stability.
Tip: Review patterns month by month. If you see frequent dips, it may be time to tighten AR collections, stagger payments, or review recurring expenses.
Accounts Receivable: Are You Waiting Too Long to Get Paid?
Unpaid invoices are silent cash flow killers. The longer you wait to collect, the more your business feels the strain—even if your sales look strong on paper.
What to review: Run your Accounts Receivable Aging Summary to see which clients still owe you, how much, and how long those balances have been outstanding. Also check your average Days Sales Outstanding (DSO).
Why it matters: The faster you collect payments, the healthier your cash flow becomes. Long collection cycles can force you to dip into reserves or delay your own payments to vendors.
Tip: Consider implementing payment terms with incentives for early pay or setting automated reminders to follow up with overdue clients.
Accounts Payable: Are You Managing Payments Strategically?
Just as you don’t want to wait too long to collect payments, you also don’t want to pay bills too early if it drains your working capital. That’s why reviewing your accounts payable is key.
What to review: Look at open bills, upcoming payment dates, and your current cash availability.
Why it matters: Strategic timing of payments can help you maintain strong vendor relationships and a steady cash position. It’s about balance—paying reliably, but not prematurely.
Tip: If you’re consistently paying early out of habit (not necessity), evaluate whether those funds could be used more effectively elsewhere.
Operating Expenses as a % of Revenue: Is Your Overhead Eating Your Growth?
Expenses aren’t inherently bad—but they do need to stay in proportion to revenue. A bloated cost structure can quietly erode profits, especially as your business scales.
What to review: Compare your operating expenses to your total revenue. Are certain categories growing faster than your income?
Why it matters: This ratio helps you identify where you may be overspending—and which areas could be optimized without affecting service or delivery.
Tip: Look at expense trends over the last 6–12 months. Rising software subscriptions, contractor hours, or office costs may need a second look.
Revenue Trends (YTD vs. Goals): Are You on Track to Hit Your Targets?
Revenue is often the first number business owners check—but without comparing it to your goals, it’s just a datapoint. A year-to-date revenue review gives you context for how your business is truly performing.
What to review: Compare your actual revenue from January through June to your original projections or goals. Also look at last year’s YTD numbers to spot any shifts.
Why it matters: If you’re ahead of goal, you may want to reinvest or expand. If you’re behind, now’s the time to adjust your strategy—not at year-end.
Tip: Use this insight to realign your marketing, evaluate pricing, or shift resources to high-performing services before Q3 passes you by.
Small Adjustments, Big Impact
You don’t need to rebuild your entire system to improve your business’s financial health. Just reviewing these six metrics—and making small, intentional shifts—can help you get back on track and plan the second half of the year with more clarity, control, and confidence.
And if you're not sure where to start? You’re far from alone.
We help business owners every day who feel overwhelmed by their numbers or unsure how to interpret what’s in front of them. With the right support, these metrics stop being intimidating—and start becoming the foundation for strategic decisions.
Not sure what your numbers are telling you?
Book a free Diagnostic & Review, and we’ll walk through these six checkpoints together—so you know exactly where you stand and what to adjust next.
