A useful Q4 financial review starts by supporting the Balance Sheet, then uses a trailing Profit & Loss and General Ledger to explain trends and transactions. The result should be a short list of decisions and unresolved items with owners and review dates—not simply another set of reports.
A strong revenue month can feel reassuring. It can also hide overdue collections, incorrectly recorded loan payments or old clearing balances. Before relying on current results to approve spending or refine next year’s plan, check the records that explain those results.
1. Support the Balance Sheet before reviewing performance.
The Balance Sheet shows assets, liabilities and equity at a point in time. Greenkey’s review begins here: are the balances supported, is loan information recorded correctly, and do important accounts agree with the relevant records?
- Cash and credit cards: match the ledger to independent statements and investigate outstanding reconciling items.
- Loans: compare the recorded liability with lender statements or an appropriate repayment schedule. Check the split between principal, interest and fees.
- Receivables and payables: tie the aging schedules to the control accounts and review old, disputed or unexpected items.
- Deposits, clearing and intercompany balances: retain supporting detail and identify the purpose, expected resolution and responsible party.
Assets equaling liabilities plus equity is an arithmetic check. It does not prove that every account is correct. A duplicated payment or stale receivable can remain in a mathematically balanced set of books.
2. Review the trailing Profit & Loss for changes that need an explanation.
Run monthly results for a useful trailing period—often 12 months, or the available period for a newer business. Use the same accounting basis and comparable reporting definitions. Look for unusual revenue swings, margin changes, expenses growing faster than activity, and costs that appear in an unexpected month.
Compare actual results with the approved budget where one exists. Distinguish timing from a recurring change: an annual insurance payment is a different question from a sustained increase in operating costs. On an accrual basis, expense recognition may differ from the payment date.
3. Use the General Ledger to investigate the story behind the totals.
When a balance or trend looks unusual, inspect the underlying activity. Confirm the account category, business purpose, entity or property assignment, reporting period and supporting document. Check for duplicate entries, unreconciled transfers and costs grouped too broadly to be useful.
Keep the explanation with the transaction or review file. Changing a category to make a report look better is not a substitute for confirming the correct accounting treatment. Escalate judgment questions to the appropriate accounting or tax professional.
4. Explain why profit and available cash differ.
Profit measures performance over a period; cash reflects receipts and payments. In an accrual-basis business, revenue may be recognized before collection. Paying loan principal reduces cash and the loan liability rather than operating profit. Equipment purchases and owner distributions can also affect cash differently from the Profit & Loss.
| Item | Effect on cash |
|---|---|
| Reported net income | $20,000 |
| Increase in receivables | −$12,000 |
| Loan principal paid | −$5,000 |
| Equipment purchased with cash | −$4,000 |
| Owner distribution | −$3,000 |
| Net change in cash | −$4,000 |
Assumes no other cash or noncash adjustments. This is a simplified explanation, not a complete Statement of Cash Flows. The example shows how a profitable month can still reduce cash.
Review the business’s actual cash-flow statement or reconciliation and near-term forecast before making a spending decision. Separate unrestricted operating cash from escrow, trust, security-deposit or other restricted funds; those balances should not be treated as an operating cushion.
5. Adapt the review to the way your business operates.
Mortgage brokers and lenders
Reconcile commission receipts and applicable production detail to the books. Review liquidity, overhead and obligations alongside funded activity. Financial schedules for regulatory reporting need their own agreed scope and review; higher funded volume alone does not establish adequate operating cash.
Explore mortgage broker bookkeeping →Real Estate firms and teams
Compare closing and commission records with receipts, agent splits and the ledger. Examine company dollar, marketing costs and upcoming commitments alongside the closing pipeline. A prospective closing is not cash already available.
Explore Real Estate bookkeeping →Property-management businesses
Keep the management company’s financial position distinct from property and client funds. Reconcile rent-roll, owner and deposit detail to the agreed control accounts. Review property-level NOI consistently, then examine debt service, capital spending and other cash requirements separately.
Explore property management bookkeeping →6. End the review with an owner, a record and a date.
For each meaningful issue, record the account or measure, the supporting information needed, its likely financial effect, the person responsible and the review date. Prioritize items that could change a cash, spending or planning decision. Revisit open items during the next monthly review.
Greenkey Accounting Services uses a Balance Sheet → trailing Profit & Loss → General Ledger sequence to connect reliable books with useful financial context. Clarity supports the bookkeeping foundation; Growth adds cash-flow and budgeting insight; Vision extends the conversation to forecasting and executive reporting.
Frequently asked questions
Why start with the Balance Sheet?
It helps confirm the assets, liabilities and equity behind the reports. Supported balances make the subsequent performance and cash conversations easier to trust.
Can a profitable business still have a cash shortage?
Yes. Collections, loan principal, asset purchases and distributions can change cash differently from net income. The accounting basis and timing of transactions matter.
Does this review include tax returns or payroll?
No. Greenkey provides bookkeeping and financial reporting. Payroll services and income-tax preparation or filing are not offered. Organized records can be coordinated with your independent providers.