Financial Repair

Within the accounting and bookkeeping industry there are two primary traits that seem to be common among all accountants and bookkeepers. That is, attention to detail, and a love for numbers. Those traits seem to be the driving force behind the motivation to do such exciting work, in an otherwise very mundane and boring industry. Perhaps, this is why you see so many entrepreneurs fall into the “messy books in accounting” trap. To avoid such a trap, here are a few interesting traits that accounting professionals possess to ensure their work is perfect.

They Emphasize Accuracy Through Effectiveness

You can distort numbers in any way you like, but the fact of the matter is numbers do not lie. The same rings true for the professionals who hold their work and processes to that highest regard. To eliminate margins of error, professionals create frameworks that give them 100% control over monitoring issues, when and if they arise.

“One of the biggest problems facing entrepreneurs today is the inability to transition to online accounting and bookkeeping tools with support from virtual accountants and bookkeepers trained at using these tools and who understand the integrations necessary to build a solid framework.

They use deductive reasoning as their primary logic
Defined: Deductive reasoning is a logical process in which a conclusion is based in accordance with multiple premises that are generally assumed to be true. It’s a top top-down logic, and proceeds from general premises to a specific conclusion. There is no room for theory, once you’ve identified one issue, then that is an issue in itself.

For example, “If receipts are missing, and all receipts are needed to be 100% accurate, your books are not accurate. If your books are not accurate, then the procedure to process receipts is flawed.”

They are accountable (pun intended )
As it’s been said, numbers do not lie, and if you do not know what you’re looking for they will deceive you. When money is on the line and there is no room for error, it’s accountants and bookkeepers who take on all the responsibility to make certain that perfection is the only option and the only way that happens is being fully accountable for managing the risk and integrations involved. When you have a professional who believes in perfection, is honest about it and takes full responsibility if something goes wrong under their control. You have yourself a trustworthy accounting professional who is honest.

“The honor among bookkeepers and accountants is knowing they fully accept the responsibility of perfection, as the numbers require them to be.”

When you have a solid framework in place, think like Sherlock Holmes and take full responsibility for perfection, you too can avoid the “messy books in accounting” trap.

Do-It-Yourself accounting practices is nothing new to entrepreneurs. Monitoring the health of your business should always be a top priority. But sometimes when you are so busy running your business, there is a tendency to fall behind on the books, which will inevitably lead towards having to initiate the “clean up your books” process. There is nothing wrong with doing your own books, but in reality the more your business grows, the frequency and complexity of doing your own books grows with it, and this will cause irregularities in importing data, leading again towards inaccurate financials.

When you are not trained in the principles of accounting and you begin to fall behind on keeping track of your books, costly mistakes will arise, which can begin a process of what we call, “messy books” and when that begins to happen, getting a real understanding of your financial condition will definitely be skewed. However, with the right kind of process in place, not only can you get your books back on track, but you will also begin to develop a process that will sustain your business activities so you never fall behind again.

First, determine where the root cause of the problem is and what may be causing your messy books. However, keep in mind the issues that arise, may in fact not be the root cause of the problem. A financial repair specialist is trained in taking a deductive reasoning approach to financial repair projects. So if you find yourself frustrated and unable to find the root cause or not sure of what to do, a financial repair specialist is a great place to start.

It is very important that even if you don’t know what the root cause of the problem is, or not even sure there is a problem, the fact of not knowing is a problem in itself and taking back control is key and will save you time and money and avoid situations such as audits, banking penalties, and overall eliminating the restrictions on growing your business. Here are some basic red flags to look out for:

Bank cards and bank statements are not reconciled.
Tax returns do not match retained earnings.
Lease payments are not properly capitalized.
There are issues in your fixed asset recordings.
Falling behind on financial obligations.
Overpaying interest due to mismanagement.
Your assets and liabilities have a negative standing.

Now that you have identified without a doubt that you have one or more issues causing discrepancies in your financials. A plan of action is required to covering one important question that must be answered immediately to ensure that accounting best practices are in place moving forward

Once your books are fixed, where do you go from there?
Today there are so many accounting tools, that the selection process alone may be overwhelming, especially when you are faced with not only cleaning up your books, but it is very important that you have a solid system in place that works for your business, or else you will find yourself in position with messy books once again. Time and effort is required, but an online bookkeeping and accounting service provider will definitely help in determine the best tools that work for your requirements.

The clean up your books process is not easy, especially when you are gathering the data and then filtering the data that begins the reconciliation process. But once the clean-up process has taken full affect, the regularity of keeping financials and reconciling them will allow you to make informed decisions as you will now have accurate books to make performance based decisions.