Quick answer
A monthly numbers check is a one-hour review of five figures: tax cover (is the tax account holding everything owed to Inland Revenue?), cash runway (how many weeks your cash would last), debtor days (how long customers take to pay), gross margin (what share of sales you keep after direct costs) and sales against break-even. Tracked monthly, they show trends early enough to act, whether that's chasing debtors, repricing or arranging funding.
Key points
- Tax cover: tax account balance compared with GST, PAYE and provisional tax owed or accruing.
- Cash runway: available cash divided by average weekly net outflow, or weeks of fixed costs covered.
- Debtor days: debtors ÷ sales × days in the period. Rising is an early warning.
- Gross margin: (sales − direct costs) ÷ sales, by product or job type if you can.
- Sales against break-even: are you above the line, and by how much?
Most owners look at the bank balance every day and the profit and loss once a year. Neither tells you much about where the business is heading. The bank balance moves with timing; the annual accounts arrive months after the events they describe. A short monthly check of five well-chosen figures sits in between, and it’s the habit that separates owners who see trouble coming from owners who meet it at the door.
Why these five numbers?
Each one answers a different question:
| Number | The question it answers |
|---|---|
| Tax cover | Is Inland Revenue’s money safe? |
| Cash runway | How long could we keep going if receipts dried up? |
| Debtor days | Are customers paying us on time? |
| Gross margin | Are we pricing and buying well? |
| Sales against break-even | Are we covering our costs, with room to spare? |
Together they cover safety, liquidity, collection, pricing and scale. If all five are healthy, the business almost certainly is. If one slips, you’ll know which lever to pull.
Number 1: tax cover
What it is: the balance of your tax account compared with what you owe or are accruing to Inland Revenue.
How to calculate it: add up GST collected but not yet paid (net of claimable GST), PAYE and employer deductions for the month just ended (due on the 20th), and the share of the next provisional tax instalment that has accrued so far. Compare with the tax account balance.
What good looks like: 100% or more. If the account holds less than you owe, the business is spending tax money, which is a risk that compounds quietly until a due date exposes it.
If it slips: increase the weekly transfer, and check whether you’re on the right GST settings. The GST & provisional tax set-aside planner recalculates the weekly amount, and how much GST to set aside explains the method.
Number 2: cash runway
What it is: how many weeks your available cash (excluding tax money) would cover the business’s fixed outgoings.
How to calculate it: operating cash plus reserve, minus anything already committed, divided by average weekly fixed outgoings (wages, rent, loan repayments, regular overheads).
What good looks like: at least four to eight weeks for most businesses, more for seasonal ones. Our page on how big your cash reserve should be explains how to set your own target.
If it slips: look forward, not back. A 13-week forecast shows whether the dip is temporary (a known tax date, a seasonal lull) or a trend. business.govt.nz recommends preparing pessimistic, realistic and optimistic versions; the pessimistic one tells you how much runway you really have.
Number 3: debtor days
What it is: how long, on average, customers take to pay.
How to calculate it: debtors at month end ÷ sales for the last three months × 91 (or use your software’s aged debtors report and average days).
What good looks like: close to your terms. On 20th-of-the-month terms, the terms themselves imply around 35 to 40 days; on 14-day terms, around 14 to 20.
If it slips: check the aged debtors report for the two or three customers driving the change, and follow your chasing timeline. See payment terms and chasing unpaid invoices.
Number 4: gross margin
What it is: the share of each sales dollar left after direct costs.
How to calculate it: (sales − cost of sales) ÷ sales, excluding GST. If your software can split it by product category, job type or customer, even better.
What good looks like: stable or rising, and in line with what your prices are designed to deliver. A falling margin is one of the earliest signs of trouble.
If it slips: common causes include supplier price rises not passed on, wage increases not reflected in prices (especially after April), heavy discounting, quotes that underestimate labour, freight left out of costs and stock shrinkage. See margin vs markup and putting prices up.
Number 5: sales against break-even
What it is: how far this month’s sales were above (or below) the level needed to cover fixed costs.
How to calculate it: break-even sales = monthly fixed costs ÷ gross margin %. Compare with actual sales. The gap, as a percentage of sales, is your margin of safety. See break-even point.
What good looks like: comfortably above, with a margin of safety that suits your risk. Seasonal businesses will dip below in quiet months; the question is whether the good months carry them.
If it slips: either sales are down or fixed costs are up. Both are fixable, but they need different responses.
A worked example
Illustrative example. A Palmerston North kitchen and bathroom renovation business runs its check at the end of August.
| Number | This month | Three months ago | Signal |
|---|---|---|---|
| Tax cover | 82% | 104% | Spending tax money |
| Cash runway | 5 weeks | 7 weeks | Falling |
| Debtor days | 52 | 38 | Customers paying later |
| Gross margin | 31% | 34% | Slipping |
| Sales vs break-even | +9% | +18% | Thinner cushion |
Every figure has moved the wrong way, but the story is clear. Two large jobs on long terms pushed debtor days up, which pulled cash down, which led to dipping into the tax account. Margin slipped because materials prices rose and quotes weren’t updated. The owner chases the two big debtors, updates the materials markup on new quotes, tops the tax account back up as receipts arrive, and books a meeting about a working capital facility so the next large job doesn’t repeat the pattern.
None of these were visible in the bank balance alone, and the annual accounts wouldn’t have shown them for months.
How do the five numbers connect?
They rarely move alone. A rise in debtor days pulls down cash runway; low runway tempts owners to borrow from the tax account, which pulls down tax cover. A falling gross margin lifts the break-even point, which thins the margin of safety even if sales hold steady. Reading the five together, rather than one at a time, is what turns a set of figures into a diagnosis.
A useful habit is to ask “which number moved first?” In the renovation business example, debtor days moved first, and everything else followed. Fixing the first domino usually fixes the rest. When the first mover is gross margin, the answer is usually pricing or purchasing. When it’s cash runway on its own, it’s often a known event such as a tax date or a seasonal lull, and the forecast will show whether it recovers.
What else is worth a glance?
If you have time, three extra figures add depth: leave liability (accrued annual holidays owed to staff, see holiday pay basics), stock days for businesses holding inventory, and owner’s pay against plan, so personal drawings stay sustainable.
How do you make the check stick?
- Same day, every month. The first Monday after month end works for many owners.
- One page. A simple spreadsheet or dashboard with the five numbers and the last six months.
- One action. End every check with one decision, written down.
- Share it. With a business partner, a key manager or your accountant. Explaining the numbers to someone else sharpens your own reading of them.
When the numbers point to funding
Sometimes the check shows a business that’s doing well but stretched: margins healthy, sales above break-even, but debtors and stock growing faster than cash. That’s often a case for working capital rather than a sign that something’s wrong. You can check your options here without a credit check.
Bring your numbers to the conversation
Owners who can show a lender five clear monthly figures, and explain them, make the funding conversation faster and more productive. If your check shows a growth step or a timing gap that funding would solve, talk to us. We look at unsecured options for trading businesses, typically $5,000 to $500,000, and loans secured on residential or commercial property from $20,000 to $5,000,000. There’s no credit check to enquire, your enquiry stays with one team, and a real person on our New Zealand team reads it. Please answer the form accurately so our first call can be specific. See if you qualify.
Frequently asked questions
How long should a monthly numbers check take?
About an hour once your accounting software is set up with bank feeds and reports. The first one or two take longer while you work out where each figure comes from.
Do I need an accountant for this?
No. These are management numbers you can pull from most accounting software. Your accountant can help set up the reports and check you're reading them correctly.
What's a good debtor days figure?
It depends on your terms. On 20th-of-the-month terms, a figure around 35 to 40 days is roughly what the terms imply. Anything well above your terms means customers are paying late.
What should I do if the numbers look bad?
Pick the one figure that's moved most and act on it first: chase debtors, review prices, cut a cost or top up the tax account. If the issue is a timing gap that won't close quickly, consider working capital options before it becomes urgent.