Monthly Financial Review Checklist for Businesses

Running a business in India demands more than chasing sales—it's about navigating a maze of GST, TDS, payroll regulations, and frequent compliance updates from the GSTN portal or Income Tax Department. Yet, surveys from the Ministry of MSME reveal that over 60% of Indian SMEs skip structured monthly financial reviews, leading to cash crunches, tax penalties, and stalled growth.

Are These Questions Keeping You Up at Night?

If you've puzzled over these:

• Why does my bank balance never match my reported profit?
• Why do GST notices pile up despite filings?
• Do I truly grasp my business's financial health?

You're in good company. A monthly financial review checklist synchronizes your growth plans with actual resources, captures every rupee of revenue, flags compliance risks early, and delivers a holistic view of your finances. This guide offers an India-specific framework—complete with checklists, pitfalls, examples, and best practices—to keep you compliant, cash-positive, and confident.

Why Monthly Financial Reviews Matter for Businesses

Monthly reviews aren't optional paperwork; they're your financial GPS in India's regulatory landscape.

1. Keeping Plans and Resources in Sync

Business plans—hiring more staff, launching marketing campaigns, or investing in equipment—often overestimate cash availability. Without monthly checks, optimism turns into overdrafts.

Real Example: A Mumbai logistics startup eyed a new warehouse, projecting ₹15 lakh in free cash. Their review uncovered:

• ₹8.5 lakh in 45+ day overdue invoices
• ₹3.2 lakh pending GST output liabilities (GSTR-3B shortfalls)
• ₹1.7 lakh vendor dues risking supply disruptions
• ₹2.1 lakh unclaimed Input Tax Credit (ITC)

Postponing saved them from insolvency. Regular reviews ensure budgets reflect real-time cash through cash flow forecasts, expansion stays within working capital limits, debt servicing like MSME loans under CGTMSE is prioritised, and profit margins are tracked against industry benchmarks such as 10-15% for logistics per RBI data.

At Jordensky, we've helped 200+ SMEs realign plans, often revealing 20-30% "hidden" cash gaps.

2. Big Picture Overview of Business Finances

Forget daily expense hunts—monthly reviews zoom out to reveal revenue sources like UPI, which accounts for 45% of digital payments per NPCI, bank transfers, and POS. They expose expense drains from vendor leaks and GST mismatches, show what's left as net working capital for reinvestment, and identify leak points like unbilled services or ignored TDS recoveries.

This shifts you from reactive firefighting (e.g., scrambling for GSTR-3B deadlines) to proactive strategy. Key metrics include P&L trends such as EBITDA margins, working capital cycle components like DSO, DIO, and DPO, debt-to-equity ratios, and tax outflow forecasts for advance tax u/s 211.

Visibility like this cut cash flow volatility by 25% for Jordensky clients last year.

3. Ensuring All Revenue Is Recorded

Revenue leakage plagues 40% of Indian SMEs (per the PwC India report), often from fragmented digital streams. A Delhi café chain lost ₹3.2 lakh in UPI payments after mismatched reconciliations—enough for three months' rent.

Why It Matters:

• Boosts profit accuracy by 15-20%
• Prevents GSTR-2A/2B mismatches triggering notices
• Enables precise cash forecasts
• Avoids IT scrutiny for under-reporting u/s 68

Are Your Monthly Financial Statements Timely and Accurate?

Timely, accurate statements are the litmus test of financial health. If delayed beyond the 5th (GSTR-3B) or 30th (bank recs), problems compound.

Warning Signs of Inaccurate Financials

Watch out for GST mismatch notices with ₹10,000+ late fees, bank balances not matching book cash from issues like uncleared cheques, MIS reports lagging by 15+ days, constant expense tweaks indicating poor classification, and profits on paper but negative bank flows.

Common Causes in Indian SMEs

The culprits often include manual ledgers ignoring UPI/POS where RBI notes 30% unreconciled digital transactions, skipped TDS u/s 194 on items like professional fees, delayed vendor accruals, personal expenses in business books such as family travel, and inconsistent policies switching between cash and accrual methods.

These snowballs turn into audit nightmares under Section 44AB.

Monthly Financial Review Checklist (Core Framework)

Follow this step-by-step, India-centric checklist on the 1st-5th of each month. Allocate 4-6 hours; automate where possible.

1. Revenue Verification (30-45 mins)

• Record all invoices in ERP/Tally (match against sales log)
• Reconcile sales register with bank statements (use NEFT/RTGS filters)
• Verify UPI/POS/wallets via Razorpay/Paytm dashboards
• Scrutinize credit notes/refunds (GST Rule 53)
• Reconcile GSTR-1 outward supplies (upload by 11th)

Tip: Flag invoices >30 days; chase via WhatsApp/email templates.

2. Expense Validation (45 mins)

• Match vendor bills to purchase orders
• Classify per GST HSN (e.g., 18% for marketing services)
• Claim eligible ITC (GSTR-2B auto-populated)
• Track recurring (rent, software) vs. one-offs
• Audit discretionary (travel, gifts > ₹50k needs 194R TDS)

Tip: Use Excel pivot for category overspends.

3. Bank & Cash Reconciliation (30 mins)

• Line-by-line bank statement match (IFSC-wise)
• Trace outstanding cheques (>6 months write-off)
• Reconcile UPI/IMPS (NPCI daily limits)
• Verify petty cash vouchers
• Probe unknowns (e.g., refunds as income)

4. GST Compliance Check (45-60 mins)

• GSTR-1 vs. 3B (liability = output - ITC)
• Match ITC claims to GSTR-2B (block u/s 17(5))
• Compute late fees (₹50/day) & interest (18% p.a.)
• Identify blocked credits (e.g., motor vehicles)
• Review e-way bills (₹1 lakh+ interstate)

Tip: Use the GSTN portal's mismatch tool.

5. TDS & Payroll Review (30 mins)

• Verify deductions (e.g., 10% on contractors u/s 194C)
• Confirm challan credits (CIN match)
• File 26Q/24Q by quarter-end
• Reconcile salary to Form 16
• Check PF (12% employer) & ESIC (0.5-5%)

6. Financial Statement Review (45 mins)

• P&L: YoY variance analysis
• Balance Sheet: Current ratio (>1.5 ideal)
• Cash Flow: Operating cash positivity
• MIS: KPI dashboard (e.g., Google Sheets with charts)

This mirrors Jordensky's client process, catching 90% issues pre-filing.

FAQs

What is a monthly financial review?
A 4–6-hour process verifying revenue/expenses/taxes for accuracy.

Why critical for India?
Handles GST/TDS/ROC complexities; avoids ₹10k+ fines.

Record all revenue how?
Daily UPI/POS logs + monthly bank records.

Legally required?
No, but essential for 44AD presumptive tax/audits.

Frequency?
Monthly and quarterly deep dives.

Key Takeaways

• Sync plans with real resources via records
• Capture 100% revenue to plug leaks
• Nail compliance to dodge penalties
• Gain big-picture insights for growth
• Start today—your numbers won't lie.

Ready to Transform Your Financial Management?

Strong CTA: Ready for crystal-clear finances? Jordensky delivers monthly reviews, GST/TDS automation, MIS dashboards, and compliance peace. Book your free consultation today—uncover hidden cash and scale confidently. Schedule Now

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