When The Numbers Didn’t Add Up, We Stopped the Project

Photo by George Becker

We recently stopped work on a large accounting project. We spotted something in the numbers that just didn’t make sense. And if we’ve learned anything over the years at Oracle Profitability, it’s this: when the numbers don’t make sense, you need to get to the bottom of what is really going on.

Our team had already invested significant time organizing the client’s financial structure, preparing reports, and getting everything ready for the next phase. It was inconvenient to stop mid-plan, as we had good reason to keep the project moving.

But at a certain point in the process, some of the information we were seeing stopped lining up.

We had a choice, we could continue working with what we had and assume the discrepancy would eventually be resolved, or we could go back through the information we’d been given and figure out why certain sets of numbers were telling us different stories.

We chose to stop.

As we started asking questions and comparing information, we discovered that we weren’t working from a complete financial picture. It happens more often than you might think. Essentially, different people involved in the project believed we were all looking at the same information when, in reality, we weren’t.

No one was intentionally withholding information, and no one person had gotten it wrong. An assumption had been made, and that assumption affected everything that came after it. If we hadn’t stopped to question it, we would have continued making decisions based on an inaccurate financial picture. 

How Businesses End Up Working From Different Financial Information

As a business grows, financial information rarely lives in one place or passes through a single person’s hands.

You may have a bookkeeper maintaining the accounting system, an internal team managing billing or purchasing, a CPA preparing taxes, a payroll provider processing payroll, department heads tracking their own budgets, and an owner or leadership team reviewing financial reports. Information may also be moving between your accounting software, payroll system, CRM, banking platform, expense management tools, spreadsheets, and other systems used to run the business.

That creates a lot of places for information to become disconnected. You can have good people doing their jobs well and still end up with financial information that doesn’t agree.

This is one of the reasons financial oversight and working with a controller becomes more important as a business grows. Someone needs to look across the entire financial picture and make sure the pieces actually fit together.

For our team, that means asking questions when something looks off. Does this report agree with the general ledger? Why did this balance change so much from one month to the next? Does the revenue we’re seeing here match what’s being reported elsewhere? Are we comparing the same time period? Is there information that hasn’t been recorded yet?

Sometimes there is a simple explanation. A transaction hasn’t been entered, two reports cover different periods, or information is being tracked somewhere we didn’t know about. What matters is finding the explanation.

Once those numbers are being used to make decisions about hiring, spending, cash flow, pricing, or the future of the business, as a business owner you want to know if the financial picture you’re relying on is accurate.

Before You Make a Major Decision, Make Sure You Trust the Numbers

You don’t need to personally audit every number in your business. That’s not a good use of an owner’s time. You should, however, be able to trust the information being used when you’re making a significant financial decision.

This becomes particularly important when you’re considering a major hire, purchasing equipment, expanding into another location, changing your pricing, taking on debt, distributing profits, pursuing an acquisition, or making another significant investment in the business.

Start by asking where the information came from.

If your team is recommending a decision based on a particular report, understand what is behind that report. How current is the information? Have the accounts been reconciled? If information is coming from multiple systems, do those systems agree? Are there outstanding invoices, bills, payroll obligations, debt payments, taxes, or other transactions that could materially change what you’re seeing?

If something looks unusual, ask why.

“We’re not sure yet” can be a perfectly responsible answer. It means there is something your financial team needs to investigate before giving you an answer they can stand behind.

Business owners often come to us because they need answers quickly. Should we hire? Can we afford this? Why is cash tight? Where is our profit going? Is this part of the business actually making money?

Of course you need timely answers to those questions. But an answer is only useful when the information behind it is reliable.

An extra day or week spent validating the numbers may be frustrating when you’re waiting to make a decision. Discovering six months later that you made that decision based on an assumption that wasn’t true is considerably more frustrating and potentially much more expensive.

Your Financial Team Should Know When to Stop

There is value in having financial professionals who can give you answers. There is just as much value in having people who recognize when they don’t have enough information to give you the right answer yet.

Your bookkeeper may notice a transaction that doesn’t belong. Your accountant may see that an account isn’t reconciling. Your controller may recognize that two reports are telling different stories and start asking why.

Catching those things is part of good financial management.

In our case, we wanted to keep the project moving. Our responsibility, though, was to make sure that when we did move forward, we were working from information we could stand behind.

So when something in your financials doesn’t make sense, give your financial team the time to find out why. And when necessary, stop. The time you spend getting to the bottom of a discrepancy is small compared with the time and money it can take to unwind a business decision made with the wrong information.

If you're seeing discrepancies between reports, struggling to understand where your cash is going, or questioning whether you have the full financial picture, those questions are worth investigating.

Our team can help you get to the bottom of what's happening and determine what needs attention.