How to Conduct a Mid-Year Financial Review
Halfway through the year is the perfect time to hit pause, take a step back, and evaluate your financial landscape. A mid-year financial review isn’t about playing catch-up—it’s about staying aligned with your goals, spotting opportunities, and making informed decisions for the road ahead. Whether you're a small business owner or managing a growing operation, a clear financial check-in can provide the focus and direction needed to finish the year strong.
Revisit Your Financial Goals
At the start of the year, most businesses set financial goals with the best intentions—aiming for growth, efficiency, or increased profitability. But by mid-year, those goals may need a reality check. A lot can change in six months: market conditions, customer behavior, internal capacity, or even broader economic factors. Revisiting your goals now ensures you’re not chasing outdated targets or overlooking emerging opportunities.
Begin by pulling out your original goals and reviewing them one by one. Ask yourself: Are these still relevant? Have you made progress, fallen behind, or surpassed expectations? For example, if you set a goal to increase monthly revenue by 15% and you’ve only achieved 5%, it’s important to assess whether the shortfall is due to internal issues, external shifts, or misaligned expectations. On the flip side, if you’ve exceeded certain goals, it may be time to raise the bar.
This is also a good time to assess whether new goals should be added. Perhaps you discovered an unexpected revenue stream or experienced cost savings in an area that wasn’t originally on your radar. These developments deserve attention and could become focal points for the second half of the year. Financial reviews should be dynamic, not static. Goals aren’t carved in stone—they’re tools to help you steer the business with intention.
When adjusting your goals, remember to keep them SMART: Specific, Measurable, Achievable, Relevant, and Time-bound. If a goal to “reduce expenses” was too broad, reframe it as “cut monthly software costs by 10% by September.” The more focused your goals are, the easier it becomes to track your progress and stay accountable.
Lastly, share your updated goals with any team members who play a role in achieving them. Financial clarity isn’t just for leadership—it’s for everyone making daily decisions that affect the bottom line. Realigning as a team creates a shared sense of purpose and helps drive momentum into the latter half of the year.
Analyze Your Income and Expenses
A clear picture of your income and expenses is one of the most valuable outcomes of any mid-year financial review. While it may seem basic, taking the time to closely examine how money is coming in and going out often reveals patterns, gaps, and opportunities you might otherwise overlook.
Start with your income. Break it down by product line, service category, or revenue stream—whatever makes sense for your business model. Are some offerings consistently performing better than others? Is revenue seasonal or trending upward in specific areas? Look beyond the totals and into the timing and sources of your income. This can inform decisions about where to focus marketing or sales efforts in the coming months.
Next, take a hard look at your expenses. Separate fixed costs (like rent, salaries, or insurance) from variable ones (such as travel, supplies, or software subscriptions). Examine whether any categories are growing faster than expected or eating into your profits. Often, small monthly costs can quietly pile up—unused subscriptions, duplicated services, or escalating vendor rates may be dragging down your margins without much notice.
It’s also worth checking for mismatches. For example, if income has plateaued while certain expenses have climbed, that’s a red flag that needs attention. Conversely, if you've managed to reduce spending without harming output or client satisfaction, you may want to document and reinforce those efficiencies.
The key takeaway? Don’t just look at your numbers—interpret them. Use this analysis to make informed adjustments, whether that means renegotiating contracts, rethinking pricing, or reallocating budget to areas with the best return. Clarity at this stage will empower you to make decisions that align with your broader goals for the remainder of the year.
Evaluate Cash Flow Health
Cash flow is the lifeblood of any business. Even if you’re hitting revenue targets, poor cash flow can quickly put the brakes on growth, delay payroll, or strain relationships with vendors. That’s why a mid-year review should include a close evaluation of your cash flow—how money moves in and out of your business, rather than just focusing on profits.
Start by examining your current cash position. Are your bank balances stable? Have there been months where cash reserves dipped too low for comfort? Looking at your cash flow month-over-month can help you identify patterns, such as seasonal dips or late payments that regularly cause bottlenecks. These insights allow you to anticipate and plan rather than scramble to cover shortfalls.
Next, review your accounts receivable. Are clients or customers paying on time, or are there aging invoices that are dragging down your liquidity? Delayed payments can create a cash flow crunch even when your books show solid income. Consider tightening payment terms, sending earlier reminders, or offering small incentives for faster payments if delays are becoming a trend.
It’s also important to analyze your outflows. Are there recurring expenses that can be restructured, paused, or consolidated? Even small shifts in payment schedules or negotiated vendor terms can ease pressure on your cash position. For businesses with inventory, holding too much stock can tie up cash unnecessarily. Consider whether your purchasing practices are aligned with actual demand.
Finally, if you haven’t already, this is a great time to create or update a rolling cash flow forecast for the next 3 to 6 months. This forward-looking tool helps you visualize how expected income and expenses will impact your cash position—and gives you time to adjust accordingly. Healthy cash flow isn’t just about survival; it’s what allows you to invest confidently, weather unexpected costs, and pursue new opportunities without hesitation.
Review Your Financial Statements
Mid-year is the ideal time to step back and take a holistic look at your financial statements. These reports don’t just serve accountants—they offer critical insight into the overall health and performance of your business. Understanding them empowers you to make informed decisions, identify inefficiencies, and chart a clear path forward.
Start with your Income Statement, also known as the Profit and Loss Statement. This report shows your revenues, costs, and expenses over a specific period. It helps you determine if you're operating at a profit or loss and why. Are certain expenses consistently cutting into your margins? Is a particular product or service underperforming? The income statement can reveal where your business is thriving—and where it's treading water.
Next, review your Balance Sheet, which provides a snapshot of your business’s financial position at a specific point in time. It outlines your assets, liabilities, and equity. This statement shows whether your business has enough resources to meet its obligations. Pay attention to how your liabilities compare to your assets, and note any changes in working capital since the beginning of the year. A strong balance sheet often means stability; a weak one might signal it's time to reassess how you're funding growth or managing debt.
Don’t overlook your Cash Flow Statement, especially if you’ve already uncovered cash-related concerns. This report breaks down how cash enters and exits your business through operating activities, investing activities, and financing activities. It helps you understand not just how much money you’ve earned, but when and how that money is moving. This level of clarity is especially useful when planning for upcoming expenses or evaluating your readiness for new investments.
Together, these three reports provide a well-rounded view of your financial standing. They help you shift from gut-feel decision-making to data-driven strategy. If you’re not sure how to interpret trends or anomalies in your statements, this is where working with a financial professional, like the team at HAS, can make all the difference. Our team helps clients not only make sense of the numbers but also turn them into actionable insights that support smarter operations and long-term growth.
Reassess Strategic Investments
Strategic investments are the backbone of long-term growth, but they’re only effective when they deliver real value. At mid-year, it's essential to take a step back and evaluate whether the big decisions you made at the start of the year are still aligning with your goals and yielding the expected returns.
Start by identifying the major financial commitments you've made so far—things like new technology, equipment, marketing campaigns, staff hires, or training programs. Then, ask the tough but necessary questions: Are these investments paying off? Have they improved efficiency, boosted revenue, or positioned your business for growth? If you’re not seeing the measurable impact, it may be time to course-correct or reallocate resources.
It’s equally important to distinguish between short-term costs and long-term gains. Some investments take time to bear fruit, and a mid-year review isn’t necessarily about abandoning them, but rather ensuring they’re still on track. For instance, if you invested in a new CRM system that hasn’t shown clear results yet, check whether it’s being used effectively. Sometimes the issue isn’t the investment itself, but the implementation.
You should also revisit any opportunities that felt out of reach earlier in the year. With half the year behind you, your financial position may have shifted positively or negatively, allowing you to reconsider postponed initiatives. Are there smart, strategic moves you can now afford to make? Or should you press pause on expansion plans to stabilize your core operations?
Reassessing strategic investments isn’t about being overly cautious—it’s about being intentional. This process allows you to double down on what’s working and minimize waste in areas that aren’t producing value. By reviewing your investments through a performance and alignment lens, you can ensure your business is using its resources wisely and setting the stage for a strong second half of the year.
Plan Ahead: What Needs to Happen in the Next 6 Months
After assessing your financial goals, cash flow, investments, and overall performance, the next step is looking forward. The second half of the year is an opportunity to implement the changes your review has uncovered—whether that means improving operations, ramping up what’s working, or eliminating what’s not. This forward-focused planning is where your mid-year review becomes actionable.
Set Specific Priorities
Begin by setting specific priorities based on your current trajectory. If your revenue is behind projections, what steps can you take to close the gap? That might involve focusing on higher-performing products, launching a new service, or refining your sales strategy. On the other hand, if you're ahead of schedule, you may want to reinvest in growth areas or bolster your reserves for future flexibility.
Operational Changes
Operationally, think about what changes or adjustments need to be made in your workflows, team structures, or financial management systems. For example, if you identified issues with delayed client payments, setting up a more proactive invoicing or follow-up system in the next quarter could significantly improve cash flow. If costs are creeping up in certain areas, now is the time to renegotiate contracts or explore more cost-effective alternatives before year-end expenses pile up.
Revisit Your Budget
It’s also a good idea to revisit your budget and make necessary adjustments. A budget should be a living tool, not a static document. Realigning your budget for the next six months ensures it reflects updated goals, market realities, and financial insights gathered during your review. Look at both revenue expectations and cost projections, then recalibrate based on what’s feasible and strategic.
Short-term Checkpoints
Finally, set short-term checkpoints to stay on track. Don’t wait until the end of the year to revisit your progress. Set a reminder to conduct a mini-review at the end of each month or quarter, focusing on just a few key metrics. This keeps your financial picture fresh and allows you to remain agile, making adjustments before small issues become bigger problems.
Planning ahead isn’t about predicting the future—it’s about preparing for it. With a clearer picture of where you’ve been and where you are now, the next six months can be navigated with greater confidence, intention, and efficiency.
Taking the time for a mid-year financial review isn’t just a good habit—it’s a strategic move that can help you finish the year stronger and more focused. By revisiting your goals, analyzing key financial metrics, and making thoughtful adjustments, you give your business the clarity and control it needs to grow with confidence. And if you’re unsure where to start or what your numbers are telling you, Hasenbank Accounting Services is here to help you make sense of it all, so you can move forward with peace of mind.
Hasenbank Accounting Services provides remote accounting support to Managed Service Providers and IT businesses. With over 27 years of accounting experience and 23 years supporting the IT industry, we are focused on making the financial aspects of your MSP business one less thing to worry about. Contact us today to see how we can help you.