Straightening Out Your Financial Reports

Consistency in data management and control is the key to preventing messy books.

The Start

The very essence of accounting is organization. Recording transactions, summarizing activity, and reporting results fundamentally revolve around organized data and information. But good accounting is all about organizing data correctly — that is, in a manner that lends itself to further analysis. 

A new business with few transactions may not have difficulty keeping its accounting organized or quickly putting together clean, accurate financials. But as a company grows and transaction volumes increase, it becomes increasingly difficult to juggle all the processes necessary to keep accounts and financials in order. Inconsistent sorting, random adjustments, and too many unwieldy and ultra-specific accounts are all too common.

The result? Unreliable, messy books that make it difficult for leaders to get an accurate picture of the company’s past and present positions. 

The Mess

Duplicate, incorrectly sorted, and unmatched transactions obscure the true picture of income and expenses in a period. Trusting — and acting on — misstated account balances can be costly for a business, and realizing that the financial information presented is essentially meaningless can be extremely frustrating.

One miscategorized transaction can throw off two or more accounts. And the more those mistakes multiply, the less our books depict an accurate picture of past, present, and future positions.

The mess creeps up slowly at first. A few transactions are sorted into the wrong accounts and left to fix “later.” An executive decision is made to include location-specific expense accounts, exponentially expanding the chart of accounts. The summer intern accidentally duplicated all of last month’s transactions. And now, all of a sudden, the financials are all wrong, a deadline is approaching, and you have no idea where to even start.

For this very reason, periodic clean-ups have become a standard process in many accounting departments. Time is earmarked to determine just how far the books have strayed from the truth, if the difference is material or not, and what adjustments are needed to bring the financials back to order.

Problem is, in no time at all after each in-depth review and adjustment session, the errors collect just as fast as before. Limited resources and overstretched employees make it near impossible to manually improve data management, oversee every single accounting decision, and avoid all errors.

And since adjustments and short-term fixes fail to address the root cause, it’s inevitable that poor data management stemming from ineffective tools, rules, and processes will continue to produce chaos.

The Solution

Permanently breaking the cycle of errors requires better tools and efficient information structures that support enhanced control over data. NetSuite’s cloud accounting software solution is an intelligent, rules-based engine that automatically classifies transactions, applies accounting treatments consistently, and assigns accounts based on defined criteria.

When incoming transactions are sorted into the correct accounts all the time, every time, it reduces the need to locate errors and keep making adjustments, year over year. Additional accounting tools specifically built for managing complex processes, like accounts receivables and fixed assets, simultaneously provide a deeper level of control and better management while reducing manual effort and human error.

NetSuite’s platform operates from one single source of data that ensures the information from these systems supports the accuracy and reliability of core financial statements. With these tools and NetSuite’s multidimensional data capabilities, finance professionals can address the root cause of messy financial data, eliminate errors, and improve oversight and control.