Getting Up-To-Date Numbers
One of my friends is a board member of a not-for-profit organization and he continually complains that he does not get timely financial information. The people running it claim the bookkeeping is always behind and reports cannot be issued until everything is balanced, checked out and they are sure the numbers are right.
That got me thinking about whether it is more important to have inaccurate information quickly or perfect information late. Obviously, it is better to have accurate information quickly, but many times, a choice is necessary. I contend it is better to get the numbers sooner, even though wrong. Here is my reasoning:
- I believe it is super important to have the records up to date and the inability to produce any type of reports is an alert that records are not being properly maintained
- In my experience, accounting records that are not up to date are a signal of other issues within the organization. This can also indicate tardy issuance of invoices or deposit of funds, payment of bills or taxes, lagging entry into inventory or identification of what is on hand, or simply not knowing the check book balance
- In today’s digital universe, bank account statements can be viewed online and reconciled long before statements are received in the mail
- Bank accounts that are not reconciled promptly are danger signals that should not be ignored. The reconciliations and procedures should be reviewed periodically by management
- Wrong numbers promptly and properly reviewed can indicate trends that can lead to further inquiry and discussions. No numbers thwarts any type of analysis
- The best information seven weeks late cannot provide effective help to management or the people charged with overseeing an organization’s operations
- Irrespective of when financial data is provided, a routine of periodic reviews or internal audits of the information should be established
- KPIs are another tool frequently used by management that provide benchmarks of activity and can cause immediate reaction to unusual activity or deviations from what is expected. See my blog dated July 16, 2013
With today’s software and interactive systems, keeping current is getting easier and easier to do with many types of user-friendly reports able to be generated. If your system doesn’t provide what you need, work with your accountant or a consultant to get it done for you.
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