A financial health checklist for your small business clients

For many SMEs, the period immediately after Christmas is deceptively calm. The peak trading period has passed, cash balances may look healthier than expected, and attention quickly turns back to operations. For accountants working with smaller businesses that typically don’t have their own Finance Director, this is often the point where financial risk quietly builds. Q1 is a crucial window to review resilience, spot early warning signs, and make sure clients are positioned to make informed decisions, before pressure mounts.

We’ve created a checklist for you to make your conversations with clients as productive as possible:

1. Review cash flow resilience

Checklist discussion points:

• Is there a need to create a financial forecast covering regular working capital flows, but also due dates for taxes, including payroll taxes, VAT, corporation tax/income taxes are going to be possible?

• Consider that directors may require increased earnings or dividends in January to cover their personal income tax liabilities. 

• Are there deferred costs from December now becoming payable, such as recruitment agency costs or advertising or marketing campaigns. 

• What large non monthly payments fall due in Q1 or early Q2, including:

  • Insurance renewals

  • Professional subscriptions and licences

  • Advertising or marketing commitments

  • Software and system renewals

Practical tip: Ask clients to list every payment over a defined threshold (for example £2,000) due in the next quarter, or review accounting records for cash outflows made in the similar period last year. Seeing them in one place often changes how confident they feel about “being fine”.

2. Spot early warning signs of financial stress

Warning signs to explore:

• Paying suppliers later than agreed terms or attempting to negotiate new due dates

• Difficulty meeting VAT, PAYE or NIC deadlines or requesting a Time to Pay with HMRC

• Gross profit margins reducing without a clear strategic reason

• Increasing bad debts or older aged debtors becoming worse

• Considering delaying the filing of annual financial statements

• Reducing the services they take from you to lower their costs

Practical tip: Check their Capital Report for the payment performance record, especially if it is declining or below industry norms

3. Check business credit scores before they matter

Checklist actions:

• Review the client’s Capital Report for their business credit status

• Check for:

  • Late payment markers

  • Increasing number of credit searches conducted on them

  • CCJs or Gazette Listings

Practical tip: If your client also has a Capitalise for Business account,, the directors can verify their identity. This will give further credit score information as they will be able to see their consented score. 

4. Identify which clients may need funding support in Q1 or Q2

Clients worth flagging early include those:

• Experiencing margin pressure or rising costs

• Investing in people, systems or stock ahead of the future revenue from that investment

• Managing seasonal working capital swings

• Reliant on a small number of customers

• Facing upcoming tax or VAT peaks with limited headroom

This isn’t about encouraging borrowing. It’s about ensuring clients understand:

• That investment is required for growth and larger companies typically always rely on also accessing external finance in order to achieve their business plans

• What funding options exist, what lenders expect and how long the process realistically takes

Practical tip: Run an early stage search on the Capitalise platform to see what could be possible. The shortlist of results is based on hundreds of thousands of transactions on the platform, giving a history which estimates the likely chance of success, expected rates, timescales and reviewing over 130 lenders. Even knowing funding is available can improve decision-making and reduce stress for clients.

5. Credit assess customers and review terms of trade

Checklist points to cover:

• Are customers' credit scores checked before trading?

• Are credit limits reviewed as customers grow or as economic climate changes?

• Are payment terms enforced consistently?

• Do terms of trade clearly cover:

  • Payment deadlines

  • Interest on late payment

  • Recovery costs

Practical tip: Long standing customers often drift onto informal terms that no longer reflect risk. A light touch review every few months can prevent potential significant bad debts later in the year.

6. Review the fixed asset register and review efficiencies

Suggested exercise with clients:Select one or two key assets and compare:

• Annual repair and maintenance costs

• Downtime and lost productivity

• Energy or efficiency costs

• Management time spent dealing with issues

With:

• Lease or finance cost of replacement

• Lower running and energy costs

• Reduced downtime

• Improved capacity or output

Practical tip: Don’t forget to include the tax benefits of capital allowance reliefs when considering investing in fixed assets

For SMEs without a Finance Director, these conversations usually only happen if the accountant initiates them. So, acting as a sounding board provides valuable added benefit to your client with their confidence and decision making, as well as strengthening your relationship.