What Clean Books Actually Look Like
Bruno the Bear
The short answer: Clean books mean every bank and card account is reconciled through last month, nothing is sitting in a suspense account, the balance sheet has no negative balances where there shouldn't be, and the numbers haven't changed since they were last reported. You can check all four yourself in about twenty minutes.
The twenty-minute check
1. Open the reconciliation report for every bank and card account. Look at the date of the last completed reconciliation. If it's more than one month back, you have a gap and you now know how big it is.
2. Look for a suspense or "ask my accountant" account. Anything sitting in there is a transaction nobody understood. A few is normal. A few hundred is a project.
3. Scan the balance sheet for impossible numbers. Negative cash. Negative accounts payable. An undeposited-funds balance that never clears. These are the fingerprints of a file nobody was checking.
4. Check whether last year has moved. Run last year's profit and loss and compare it to the version your tax preparer used. If they differ, someone changed a closed period.
5. Age the receivables. Look at what's more than ninety days late. Old invoices that were never going to be collected inflate both your revenue and your assets.
6. Read the chart of accounts. If there are four accounts that all mean "software," nobody has been maintaining it, and none of your expense reporting can be trusted.
What cleanup actually costs
It depends almost entirely on one thing: how many months are unreconciled.
A file that's one or two months behind is a short job. A file that's a year behind with a full suspense account is a rebuild, and it usually costs more than a year of ongoing bookkeeping would have.
The uncomfortable part is that the cost is almost never the headline. The cost is the six weeks you couldn't answer a lender, or the diligence that stalled, or the tax return filed on numbers that turned out to be wrong.
If you got here from Bench, or from a firm that dropped you
Two situations, same problem: you inherited a file you didn't maintain and can't yet trust.
Run the six checks above before you commit to anyone new. It takes twenty minutes and it changes what you should be shopping for.
Related reading
For the handover itself, see How to Switch Bookkeepers Without Losing Your History. For who should be maintaining this going forward, see Bookkeeper, Controller, or CFO: What You Actually Need.
Want the checks run properly?
Our free Books-Cleanup Assessment runs these checks and gives you the findings in writing, whether or not you work with us. Reach us at info@ursaconsultants.com.