Messy books aren't just an accounting problem - they're a business problem. When your financials are unreliable, you can't make good decisions.
How books get messy
- No reconciliation discipline - bank accounts unreconciled for months
- DIY bookkeeping by non-accountants - good intentions, poor execution
- Accountant turnover - each person patches things differently
- Growth outpaced systems - what worked at $500K doesn't work at $5M
- Owner transactions mixed with business - no clear separation
The cleanup process
- Stop the bleeding - start reconciling the current month properly
- Define cleanup period - typically 2-3 years for sales or audits
- Reconcile everything - bank accounts, credit cards, loans, AR, AP
- Fix errors - duplicates, miscategorizations, missing transactions
- Restate financials - updated P&L, balance sheet, cash flow with documentation
- Implement processes - monthly checklist so it stays clean
Getting the numbers right is the foundation. Everything else - reporting, audits, sales, fundraising - depends on it.