hundred

5 to-dos to clean up messy accounting

This is a fairly common problem, especially if the company you are dealing with is a small yet rapidly growing business. In short, there really aren’t any accounting records, there are just source documents. Or, someone might have tried to keep the books, but they had no idea what they were doing, so the accounting records are incredibly bad.

1. Stop the fire
So, the first step is to stop the damage from occurring from this point forward. That means routing all of the new, incoming source documents through a reliable bookkeeping system. This presents a bunch of problems. First, is the original bookkeeper still going to be involved? That might be bad because the person clearly hasn’t demonstrated any ability to keep the books so far. This is going to be a judgment call. If the person is clearly incompetent, then remove him from the accounting operation immediately. If the person simply didn’t have any training, then it may be possible to correct his behavior. It is vital to record all transactions as they happen. Daily proper bookkeeping will limit the problems as the mess will not stack up any further.

2. Take Control of the Source Documents
The next issue is taking over control of the source documents. Make sure that all supplier invoices and employee expense reports are being routed straight to you. The same goes for payroll records and customer billings. It’s impossible to keep the books if the paperwork is scattered all over the company.

3. Reconcile the bank statements
Probably the most important step in getting your books in order is reconciling your bank statements. All this is to achieve the right strategic layout and balance the financial situation. You need to reconcile your business accounts with the actual expenditures and expenses to get the business on track. Bank reconciliation requires disciplinary action. Many business owners get lost here because they make things pile up. Reconciling your transactions is like washing the dishes. If you spend a little time every day, it’s no big deal. But if you let them pile up, now you are really a mess.
There’s really no reason to use a bookkeeping system if you’re not going to keep up with it. Schedule an appointment with yourself once a month to reconcile your bank statements and set your budget for the coming month. You should also check in weekly to code your transactions

4. Clean up Chart of Accounts
Start with the most important accounts. Check the account details to see if the records are entered in a logical manner. The data entry process often assumes significant manual processes that inevitably cause data entry errors. The common issues are duplicate entries or transactions with extra zeros. Once you will have confidence in the most high-impact accounts you may proceed with smaller ones.

5. Complete Financial Statements and perform a top-down analysis
Digging into the books on the General Ledger level often drives attention away from the ultimate goal, which is sensible and solid-looking financials. Once you will reach a preliminary financial statement the next thing to do is to give it a bird’s eye view and see if there are noticeable inconsistencies or balances that make no sense. This can include low depreciation amount that is accumulated on relatively high fixed assets or negative Account Payables that are usually caused by bills that were not recorded previously while the payments to vendors were executed on the bank statement. A high-level view of the financials is always the best approach for correcting messy books.

Conclusion

Dealing with messy accounting is Overwhelming as keeping your books in line can be time-consuming. The best scenario is to find someone who can set up for you, integrate the system, reconcile your accounts regularly, and send you financial reports. Sometimes, you’re too busy for an accounting clean-up. Or, you may not know what you can do to fix them. An accounting professional can help you unravel and clean up accounting records. Hiring an accountant can help: Free up your time, improve the accuracy of your books, give you peace of mind and fix accounting mistakes

Leave a Comment

Your email address will not be published.

Narek
Narek Abgaryan
Narek is the CEO of Hundred MS. Before embarking upon this position, he accumulated insightful experience including the positions of CEO, Head of Research and Member of the Board at various licensed and regulated investment companies. Narek is a graduate of Hult International Business School, Armenian State University of Economics and is currently pursuing his education at Saïd Business School of the University of Oxford. Narek is a CFA charter holder and a certified FRM.
CFA, FRM
Corporate Finance Investment Performance Management
Narek Abgaryan
Narek is the CEO of Hundred MS. Before embarking upon this position, he accumulated insightful experience including the positions of CEO, Head of Research and Member of the Board at various licensed and regulated investment companies. Narek is a graduate of Hult International Business School, Armenian State University of Economics and is currently pursuing his education at Saïd Business School of the University of Oxford. Narek is a CFA charter holder and a certified FRM.
CFA, FRM
Corporate Finance Investment Performance Management
Our Mission
Our mission is to extend our partner-based, specialized and cost-effective cooperation to our clients to enable them to focus on their long-term strategy and leverage their core competencies around value-creating activities.
Our Mission
Our mission is to extend our partner-based, specialized and cost-effective cooperation to our clients to enable them to focus on their long-term strategy and leverage their core competencies around value-creating activities.
Our Vision
We have a deep conviction that the financial system is the pillar of our civilizations. Economies that are exploding with growth are the ones that adopted modern finance. We aim to reach a reality where access to unconventional finance technics should be within reach of every economic unit. This shall empower everyone to allocate their human and financial capital more purposefully and innovatively for the benefit of a secure, wealthy, and responsible society.
Our Vision
We have a deep conviction that the financial system is the pillar of our civilizations. Economies that are exploding with growth are the ones that adopted modern finance. We aim to reach a reality where access to unconventional finance technics should be within reach of every economic unit. This shall empower everyone to allocate their human and financial capital more purposefully and innovatively for the benefit of a secure, wealthy, and responsible society.
Objectives
In "Hundred MS", we are structuring our goals to revolve around the best interests of our investors and business partners. The basis we build our strategy on is satisfaction of expectations of our Clients, by bringing substantial profits to them through ethical management of investments, assets and portfolios. In the path of achieving the set tasks, we target new financial products adapted to the Client’s needs and offer variety combinations of interdisciplinary innovations. Following our set of values, we see our short-term goal in becoming one of the leading players in the global financial markets.
Objectives
In "Hundred MS", we are structuring our goals to revolve around the best interests of our investors and business partners. The basis we build our strategy on is satisfaction of expectations of our Clients, by bringing substantial profits to them through ethical management of investments, assets and portfolios. In the path of achieving the set tasks, we target new financial products adapted to the Client’s needs and offer variety combinations of interdisciplinary innovations. Following our set of values, we see our short-term goal in becoming one of the leading players in the global financial markets.
Corporate Values
We believe that earning the trust of each Client cements the next layer of the foundation of the Company’s reputation. Financial relations are built on trust; thus, our reputation is the heart of our business. Our allocentric approach to dealing with clients ensures that we always put their interests first. We do our utmost to make sure that our decisions are utterly disconnected from the greed when it comes to rendering our services. Promulgating ethics and adhering to the highest professional standards are the bedrocks of our corporate values.
Corporate Values
We believe that earning the trust of each Client cements the next layer of the foundation of the Company’s reputation. Financial relations are built on trust; thus, our reputation is the heart of our business. Our allocentric approach to dealing with clients ensures that we always put their interests first. We do our utmost to make sure that our decisions are utterly disconnected from the greed when it comes to rendering our services. Promulgating ethics and adhering to the highest professional standards are the bedrocks of our corporate values.
Levon
Levon Garibyan
Levon is the Business Development Director and Strategy Specialist of the company. He acquired international experience of more than 10 years, managing private firms with various business profiles in UK, UAE and Russian Federation. Levon studied in Cranfield University School of Management and Moscow State University of International Affairs (MGIMO).
MSc
Business Development, Strategy & Fundraising
Levon Garibyan
Levon is the Business Development Director and Strategy Specialist of the company. He acquired international experience of more than 10 years, managing private firms with various business profiles in UK, UAE and Russian Federation. Levon studied in Cranfield University School of Management and Moscow State University of International Affairs (MGIMO).
MSc
Business Development, Strategy & Fundraising
David
David Tarkhanyan
David is the co-founder of Hundred MS. He is a Banking specialist with a focus on Financial Controlling, Planning, and Performance Management. His experience extends more than 10 years in various investment banks in Vienna and Frankfurt. David studied Physics at Bauman University and Industrial Engineering at the American University of Armenia.
CFA, FRM
Financial Controlling Investment Banking
David Tarkhanyan
David is the co-founder of Hundred MS. He is a Banking specialist with a focus on Financial Controlling, Planning, and Performance Management. His experience extends more than 10 years in various investment banks in Vienna and Frankfurt. David studied Physics at Bauman University and Industrial Engineering at the American University of Armenia.
CFA, FRM
Financial Controlling Investment Banking