What Should Business Owners Track? 5 Key Metrics for Financial Health

Accounting isn’t just about crunching numbers—it’s about making sense of a business’s financial story. Whether you’re a professional accountant or a small business owner managing your own books, knowing what to track (and why) can make the difference between staying ahead or falling behind. Here are the essential financial elements every accountant should monitor—and how doing so supports both long-term success and day-to-day operations.

1. Assets: What You Own

Assets represent everything the business owns that has value. This can include cash, inventory, equipment, property, and accounts receivable. Keeping an up-to-date record of assets helps you understand your current financial strength.

Example: A construction company tracks its equipment, vehicles, and outstanding invoices to assess liquidity and operational readiness.

2. Liabilities: What You Owe

Liabilities are your financial obligations—loans, credit card balances, unpaid invoices, and taxes owed. Tracking liabilities ensures you’re aware of upcoming payments and helps you manage cash flow effectively.

Example: A software startup monitors its business loan repayments and deferred vendor payments to forecast future obligations and avoid liquidity issues.

3. Equity: The Owner’s Stake

Equity reflects the owner’s share in the business after liabilities are subtracted from assets. It represents retained earnings and any additional capital invested.

Example: A sole proprietor uses equity tracking to understand how much of their business’s success is being reinvested versus drawn as income.

4. Income: What You Earn

Tracking income means recording all the money your business brings in, whether from product sales, services, subscriptions, or other revenue streams. This gives you a clear view of your top-line performance.

Example: A clothing boutique tracks daily sales from both in-store and online transactions. This helps identify peak shopping times and bestselling items.

5. Expenses: What You Spend

Monitoring expenses is just as critical as tracking income. This includes costs like rent, utilities, salaries, materials, and subscriptions. Categorizing expenses properly makes it easier to analyze profitability and control unnecessary spending.

Example: A marketing agency logs monthly software subscriptions, freelance payments, and office rent to monitor overhead and manage client billing more accurately.

Why Tracking These Metrics Matters

Monitoring your core financial data isn’t just good practice—it’s foundational to running a healthy business. When you regularly track income, expenses, assets, liabilities, and equity, you gain a current and comprehensive picture of your financial position.

This visibility empowers you to make timely decisions—like when to invest, reduce costs, or pivot strategy. It also helps you stay compliant with tax laws and reporting standards, improves budgeting, and builds trust with investors and lenders.

In essence, staying on top of these numbers gives you clarity, control, and confidence.

How Accounting Software Simplifies It All

Modern accounting software, like AccountEdge, automates much of this tracking. It links to bank accounts, categorizes expenses, generates financial reports, and keeps your books organized and audit-ready. For growing businesses, it turns complex financial data into clear, actionable insights—freeing up more time to focus on what really matters.

In short: when you track the right things, you make better business decisions. And when you use the right tools, tracking becomes second nature.