How accurate are our numbers?

Accuracy isn’t a feeling. Four numbers tell you how far your books can be trusted, and you can measure them in about an hour.

Owners usually sense a problem before they can name it: the P&L doesn’t match how the month felt, or the bank balance comes as a surprise. Instead of asking whether the books feel right, measure them. Each number below has a target, and together they’re your accuracy score.

An approach

1. Days to close. Count the days after month-end until last month was closed and reconciled. Target: 10 or fewer.
2. Unreconciled difference. Compare every bank, credit card and loan balance with its statement at month-end. Target: $0 on every account.
3. Uncategorized dollars. Add up everything sitting in “Uncategorized,” “Ask my accountant” or “Suspense.” Target: $0.
4. Changes after close. Total the adjustments made to a month after it was called closed. Target: under 1% of that month’s revenue.
5. Track it every month. Put the four numbers on one line each month. Three months in a row on target, and the books are accurate enough to build on.

Related

• Are we measuring what we need to make better decisions?
• Are we actually making money?

A short starting guide. More detail is on the way.