A profit and cash review is a short, structured look at where a business loses money and where its cash gets stuck, with a £ figure on each problem and a ranked list of what to fix first. If you run an engineering, technical or SaaS business with 10 to 50 staff, this guide sets out what a good profit and cash review covers, what you’ll be asked for, what it should cost, and how to run a mini version yourself this week.

What a profit and cash review is, and what it isn’t

It isn’t an audit, and it isn’t your annual accounts. Annual accounts tell HMRC and Companies House what happened, and a private company has up to nine months after its year end to file them. By the time you read them, the year is long gone, and they show totals, not causes.

A profit and cash review works the other way round. It starts from how work actually moves through the business, from enquiry to quote to job to invoice to cash, and asks at each step: where does money leak, and how much? It isn’t tax advice either. Anything touching tax, VAT or your statutory accounts stays with your accountant.

What a profit and cash review covers

In a business of 10 to 50 staff, the leaks are usually in the same six places:

• Margin by customer and job. Which jobs made what the quote said, and which customers cost more to serve than they pay.
• Prices against costs. When prices last changed, and whether they have kept up with pay and supplier rises.
• Time from enquiry to cash. How long each step takes, especially the gap between finishing a job and sending the invoice.
• Late payers. How much cash customers are holding, and which ones.
• Purchasing. Supplier spend, orders placed without checks, and cost rises not passed on.
• Admin. How many times the same order is typed into different systems, and reports built by hand each month.

Profit leaks and cash leaks are different things, and a good review keeps them apart. A price gap loses profit every year. Slow invoicing and late payers mostly hold cash: you get it eventually, but you fund the gap in the meantime.

What you’ll be asked for

Expect a short list of exports, not a mountain of paperwork. Xero, QuickBooks and Sage can produce all of these:

• Sales invoices for the last 12 months, line by line
• Purchase invoices for the last 12 months
• Aged debtors and aged creditors
• Monthly profit and loss for the last two years
• Job costs or timesheets, if you keep them
• Quotes sent in the last six months, won and lost

You should also expect someone to spend time with your team, following one real order from enquiry to cash. Most leaks only show up when you watch the work, not the ledger. If something on the list doesn’t exist, such as job costs, that is a finding in itself.

What you should get at the end

• A one-page summary you can read in five minutes
• A ranked list of fixes, each with its £ value a year, the effort involved and who in your team would own it
• A simple map of how work and money flow through the business, with the bottlenecks marked
• All the working, so you or your accountant can check every number

If a report gives you twenty recommendations with no £ figure against any of them, you can’t decide what to do first. The ranking is the point.

A worked example

Take Example Test and Inspection Ltd, a made-up technical services firm with 24 staff and £2.4m of sales. Its review might find:

• Prices behind costs: rates about 2% short of where pay rises should have taken them. £2.4m × 2% = £48,000 of profit a year.
• Site visits not recharged: about £1,500 a month of extra visits that the terms allow it to bill, but nobody does. £1,500 × 12 = £18,000 a year.
• Re-keying: six hours a week typing job details into a second system, at £20 an hour over 46 working weeks. 6 × £20 × 46 = £5,520 a year.
• Late payers: debtor days of 52 against 30-day terms, so 22 days late. Each day of sales is £2.4m ÷ 365 = £6,575, so 22 × £6,575 ≈ £144,700 of cash.
• Slow invoicing: invoices go out four days after the job. 4 × £6,575 ≈ £26,300 of cash.

That is £71,520 a year of profit leaks and about £171,000 of cash held up. The order of work then follows: the price gap first because it is worth the most, then the invoicing and chasing routine because it releases cash quickly, then the recharges. The review doesn’t make that money. The fixes do, and only once they are actually in place.

What a profit and cash review costs

There are four broad routes, and the right one depends on how much time you have and how big the leaks are likely to be.

• Do it yourself. Free, apart from your time. The mini review below will get you a rough answer in an afternoon.
• Free local support. Business support services and growth hubs offer mentoring and workshops. They are good for pointers, but rarely go into your own numbers line by line. We listed the main options in our guide to cash flow help for small businesses in Surrey and West London.
• Your accountant. Many offer advisory work alongside the accounts. Fees vary widely, so ask for a fixed quote and a clear list of what you’ll receive.
• A specialist review. Ours is called Insight: two weeks, from £1,950, ending with every leak ranked by £ value. Foresight, from £4,950, puts the top three fixes in place, including at least one working automation, and credits the Insight fee if you’ve already had it. Oversight, from £2,250 a month, keeps the work going. The details are on our services page, and how it works sets out each package week by week.

Questions to ask anyone before you pay

1. Is the price fixed, and what exactly is included?
2. Will every finding have a £ value, and will you show the working?
3. Who actually does the work: the person I’m speaking to, or someone else?
4. How much of my team’s time will it take, and when?
5. Do you earn anything from what you recommend, such as software or finance?
6. What happens after the report: who makes the fixes?

Run a mini profit and cash review this week

Five checks, each taking under an hour:

1. Debtor days. Trade debtors ÷ annual sales (including VAT, to match) × 365, then compare with your terms. Our guide to debtor days shows the method.
2. Your last ten jobs. Compare quoted margin with actual margin for each. See checking job margins.
3. The date of your last price change. If it was more than a year ago, read our signs of underpricing.
4. Job finished to invoice sent. Pick ten jobs from last month and count the days.
5. Double entry. Ask each person who handles an order what they type in that someone else has already typed.

Put a rough £ figure next to each, using the sums in the example above, and rank them. That list is the start of a plan.

When a paid review is worth it, and when it isn’t

It is usually worth paying for when sales have grown but profit hasn’t, when the business is profitable on paper but the bank balance is always tight, or when you suspect a problem but nobody has time to dig into it. It is probably not worth it if your mini review finds very little, or if you already know the one fix you need and simply need to make it.

Get a first figure in two minutes

Our free leak calculator takes four numbers and estimates how much cash your late payers and invoicing delays are holding, plus a rough price gap. If the answer is bigger than you’d like, book a free 30-minute call and we’ll tell you which leak we’d look at first, whether or not you go on to a review.