10 Financial Questions to Ask Every Month! by Frank Coker

Here are key financial performance questions that should be routinely asked every month by the owner of the company. Accountants and financial managers will look at these questions and have their own answers, but they won’t see the things the owner sees. Because we are biased, we will use some Corelytics concepts, but this can be translated to other tools that you may be using.

Key financial performance questions for the owner:

  1. Do we have any glaring new problems? Do the Corelytics Leading Indicators show any radical movements in the most current month? Which leading indicators are red and therefore need further investigation?
  2. Is revenue growth meeting our goal? Does the 24 month revenue trend show that we are on track? Do we need to make a major correction?
  3. What’s the revenue forecast for the next 12 months? Is there a potential collision with revenue and expenses in our forecast? Are we on track for a good year-end?
  4. Do we have an unusual spike in expenses that is distorting our picture? Do we need to make adjustments to get a clearer picture?
  5. Is revenue growing faster than gross margin? It should. If not, we have a potential ticking time-bomb, and we can’t “make it up in volume.”
  6. Are overheads growing faster than revenue? If SG&A is growing at or above the rate of revenue growth we probably have COGS mixed in with overheads and will not be able to fine tune pricing for products and services and will have bogus gross margin data.
  7. Is payroll or other major expense growing faster than revenue? If so, these need careful management. Runaway expenses can drain fuel vary fast. Intentional investments are a different story but they have to be tied to an increase in revenue or the company is loosing ground.
  8. Is cash keeping up with growth? If cash doesn’t grow along with revenue growth, we can be forced off the track even if everything else is working perfectly.
  9. Are we building financial strength? If working capital and the quick ratio are not improving over time, we are losing traction. If a company is growing and loosing financial strength, there is a fundamental problem that needs to be corrected before growth continues.
  10. Do we have an LOB that is hurting the business? That can put stress on part of the engine and cause a burn out.

    After these questions are answered and if all of the above are “green lights,” here are 2 more “bonus questions” that need to be asked.
  11. How do I compare with my peers? Am I falling behind or moving ahead of the industry? Industry benchmarks are the key to this question.
  12. Do I need to adjust goals to make them more realistic or to address future changes?

Then the big question: What are the top 3 priorities I want my team to focus on this month? 

When this becomes a monthly routine, it can be done very quickly, but it can be transformative to companies that think of this as a quarterly or annual process. You can get way off track and have a tough time getting back on track if steering isn't happening at short intervals.