Bookkeeping red flags may start with unanswered emails or a reconciliation date that is months behind. You thought your finances were being handled, but now you’re wondering whether your reports tell the full story.
In this October business horror story on Biz Help For You, Candy Messer explains how to check whether your books are current. You’ll learn why entered transactions aren’t enough, what to review in your reports, and how to establish clear expectations with your bookkeeper.
Bookkeeping red flags start with overdue reconciliations
Your accounting software may contain transactions without showing accurate, complete financial information.
Candy shares the story of a business owner whose bookkeeper stopped responding. An evaluation revealed that many transactions had been posted, but no accounts had been reconciled in three years. Further work uncovered missing information.
A bank reconciliation compares your accounting records with transactions that actually cleared your bank account. If that process hasn’t happened for months, your books may be behind even when transactions are entered regularly.
Check the latest reconciliation date for every bank and credit card account. Loans and lines of credit also need reconciliation. One current account doesn’t mean the rest of your books are complete.
“Seeing transactions in QuickBooks doesn't necessarily mean your bookkeeping is complete.”
Entered transactions are only part of the process. Reviewing and reconciling your records helps establish whether your financial reports are ready to use.
Check customer invoices, unpaid bills, and payroll
Your accounts receivable report should reflect what customers actually owe you. If it includes invoices you know were paid, those payments may not have been applied correctly.
Review your accounts payable, too. Bills that you paid months ago shouldn’t continue to appear as outstanding obligations.
Payroll, sales tax payments, and payroll tax payments also need accurate, timely entries. Missing information can affect your balance sheet and cash flow.
Look for numbers that don’t make sense. An unexpected negative balance or an item appearing on the wrong financial report deserves a question. Your bookkeeper should be able to explain what you’re seeing.
Ask specific questions about completed work
Instead of asking only, “Are my books done?” ask questions that clarify what has actually been completed:
- When was each bank account last reconciled?
- When were your credit cards last reconciled?
- Are accounts receivable and accounts payable current?
- Have payroll transactions been recorded?
- Are financial statements ready for the most recent month?
Bookkeeping red flags are easier to investigate when you know which tasks remain unfinished.
Set a monthly deadline and review routine
Agree with your bookkeeper on what “up to date” means for your business.
Candy explains that some businesses may expect completed, reconciled books by the 10th or 15th of the following month. Your deadline may differ, but you should know when to expect your reports.
Set a regular time to review your profit and loss statement, balance sheet, receivables, and payables. Ask questions when something looks wrong, rather than waiting until you urgently need the information.
Regular communication helps you understand the status of your books and who to contact when concerns arise.
Watch the full episode before trusting your next report
Your books help you make decisions about your business today. You need to know whether the information has been entered, reviewed, and reconciled.
Watch “Ghosted by Your Bookkeeper: How to Tell If Your Books Are Up to Date” for Candy’s walkthrough of what to check and how to keep your bookkeeping from becoming another business horror story.
