How to Complete Your Financial Health Assessment

A financial health assessment is an impactful way to understand where your company stands. Does your company have a solid financial and operational foundation for a positive growth trajectory? Are outdated or inadequate finance and accounting systems and processes preventing you from seeing the complete financial picture of the company? An objective assessment provides a starting point for rethinking the company’s finance foundation or properly developing it. A financial assessment of company health will highlight key weaknesses that require attention now, along with strengths that the company will want to continue to value.

So many factors go into determining the financial health of a company. An expert assessment can cover the essential bases, to indicate whether in fact a company is set up to consistently make good on its financial obligations in the near future and over time. The findings will also foretell if the company is on track to meet its growth goals (or could prompt an emerging growth company to get going on drawing up plans, such as where it sees its market share and valuation over the next three or five years). A properly prepared assessment goes a step further than simply determining whether the company can survive over the next few months, and explores whether it’s in a good financial position to scale up and grow.

What Is a Financial Health Assessment?

A financial health assessment covers a wide range of areas in the financial and operational areas of a company, to gain a sense of the strengths and weaknesses in current practices – among other things – that could be affecting its growth plans. At RoseRyan, our Rapid Assessment for Emerging Growth is an interactive tool that quickly assesses 16 essential areas of finance of startups. We ask a series of questions to get at how the company’s current operations and financial management are set up and performing, and how—if nothing changes—they are likely to perform over time.

Areas this assessment touches upon include:

Growth plans
Competitive concerns
Partnerships
Processes and systems
Financial obligations

A financial health assessment tool, such as RoseRyan’s, can reveal critical missing pieces to senior leaders. Focused on other areas of the business, they may have lost sight into how the business is really doing. Or the assessment could simply trigger a meaningful conversation about what needs to change to put the company on more solid footing. It can give company leaders an opportunity to reflect on how far the company has come, but also what’s required to get to the company to the next growth stage.

Why is a Financial Health Assessment Important?

As a company takes on new initiatives, hires additional people, introduces new products or services, or pursues new innovations: all of these activities can have an effect on the company’s ability to keep tabs on its performance and set a realistic, data-driven agenda. The financial health assessment can help you determine if the company is producing and looking at the right information and measuring the right metrics to inform decision-making. An assessment can clear up where financial operations could be strengthened so that the company can better position itself for scaling and growing in a sustainable way.

But don’t think of a financial health assessment service as a healthy vs. unhealthy determination. It’s a view of a certain period of time. By taking a financial assessment today, you can later see, perhaps a year from now, how the company has improved and where further improvements could be necessary.