By: Gershon Morgulis | Founder & Partner
Financial Budget
A strong budget is your roadmap for the coming year, and it relies on understanding both profitability and cash flow today.
Review the timing of your inflows and outflows to ensure you know what is coming up next month, especially if January is historically slower. Look at how your revenue and expenses are trending so you can plan for 2026 with confidence.
Before finalizing your budget, take time to review your tax position for the year. This is the right moment to speak with your accountant about whether your business structure still fits your goals, which tax credits or deductions may apply, and whether all liabilities have been recorded correctly. Confirm your estimated payments and make sure they align with your financial plan for the year ahead. Even if nothing major changes, this review gives you a stronger grasp of your financial position and helps you avoid surprises during tax season.
Areas to evaluate as you build next year’s budget include:
- Sales and Revenue Projections: Use past performance, market trends, new clients, and upcoming changes to estimate next year’s income.
- Cost and Expense Planning: Consider inflation, vendor increases, raises, and hiring plans.
- Scenario Planning: Build best, base, and worst case models to prepare for growth or challenges.
A well-built budget connects your goals to the resources needed to achieve them and helps you stay flexible when conditions shift.
Investment and Funding
Your balance sheet reveals the strength and resilience of your business.
Review your capital structure and borrowing needs to ensure they still align with your goals. If covenants are tightening or credit lines are stretched, address them early.
Evaluate:
- Whether your loan structure still supports your growth
- Whether your inventory levels are appropriate or tying up too much cash
- Whether upcoming investments such as equipment or technology will enhance operations or create strain
Every dollar invested should serve a purpose, whether it supports efficiency, reduces risk, or fuels growth.
Putting Your Review into Action
The real value of a year-end review comes from what you do with the information. When you take a step back and look at your entire financial picture, you start to see patterns, risks, and opportunities that are easy to miss in day-to-day operations. This broader perspective supports stronger decisions in hiring, growth, investment, and overall strategy.
With the insights you gather, you can enter the new year prepared and confident. To help you take the next step, we created a 2025 End-of-Year Financial Checklist that walks through each area of review, from cash flow to tax planning, and helps you translate your numbers into clear, actionable plans.
👉 Download the 2025 End-of-Year Financial Checklist
Turn your year-end review into a strategic roadmap! The Fractional CFOs at Imperial Advisory are ready to help you build a plan that supports clarity, growth, and long-term financial strength. Schedule a free exploratory call today!
Definitions and Ratios
| Term | What It Means |
| Revenue Cutoff | Making sure sales are recorded in the correct period. A December order shipped in January shouldn’t count as December revenue. |
| Benefit Contributions | Year-end employee-related costs such as health insurance, bonuses, or retirement matches. |
| Accruals | Expenses that have been incurred but not yet paid (like utilities or wages). |
| DSO (Days Sales Outstanding) | How long it takes customers to pay you after a sale — lower is better. |
| DPO (Days Payable Outstanding) | How long you take to pay suppliers — balance matters; too slow hurts relationships, too fast strains cash. |
| Inventory Turnover | How quickly your inventory sells — slower turnover can mean cash tied up in excess stock. |
| Current Ratio | Current assets divided by current liabilities — a quick check of your ability to pay short-term bills. |
| Accelerate Deductions | Buying qualifying equipment before year-end to take advantage of potential deductions (e.g., Section 179). |
| Defer Income | Waiting to invoice a major customer until January to shift income into the next year — only under professional guidance. |
| Leverage Credits | Working with your accountant to identify tax credits (like R&D or hiring incentives) that directly reduce taxes owed. |
| Sales/Revenue Projections | Using past results, market trends, and known changes to estimate next year’s sales. |
| Cost and Expense Planning | Accounting for inflation, new hires, and recurring cost increases when building your budget. |
| Scenario Planning | Testing “best,” “base,” and “worst” case financial models to see how your business would respond to change. |
| Loan Covenants | Financial promises made to lenders (e.g., maintaining certain ratios). Breaking them can trigger penalties or defaults. |
| Borrowing Base | The value of assets like receivables or inventory that determine how much you can borrow. |
| Inventory Levels | Reviewing whether inventory is moving efficiently or tying up too much cash. |