Here’s a simple test that reveals something fundamental about the quality of your business accounts.
Each year, your accountant prepares your statutory accounts.
To do that, they usually start with the figures your bookkeeper has produced during the year.
The question is this:
How many adjustments do they have to make before those year-end accounts are correct?
If the answer is very few, then congratulations. Your bookkeeping and accounting processes are working well.
But if the answer is a lot, that’s a sign of a deeper issue.
Because if your accounts need significant adjustments at year-end, it suggests the figures you’ve been reviewing month by month weren’t reliable.
Which means you may have been making decisions based on misleading numbers. And that can be just as risky as having no numbers at all.
Now, to be clear, this doesn’t necessarily mean your bookkeeper is doing anything wrong.
They may simply be producing basic transactional accounts — recording invoices, payments and bank movements accurately, but without making the technical adjustments an accountant would typically apply.
Those adjustments include things like recognising work in progress, accounting properly for depreciation, matching costs to the correct period, and ensuring revenue is recorded accurately.
Without them, the accounts are incomplete and don’t tell the full story about the state of your business.
At Insight Associates, we have a simple mantra:
“There’s no such thing as a year-end.”
In other words, the accounts you review in any given month should already be complete and technically correct. When the year-end arrives, the numbers should already be right.
If significant adjustments are needed at that point, it suggests the accounting process during the year hasn’t been operating at the right level.
We consider it a failure if major adjustments are required at year-end.
Why am I telling you this?
Because over the past few weeks, I’ve been writing to you about the three layers of a mature finance function: bookkeeping, accounting and financial leadership. All three are needed for a finance department to work properly.
Many business owners don’t realise that if bookkeeping and accounting aren’t handled consistently throughout the year, the numbers they see each month may still require substantial adjustment later.
Which means that for 11 months out of 12, they’re only seeing part of the financial picture.
A properly structured finance function ensures that transactions are recorded and accounts are adjusted every month — not just when statutory accounts are prepared — so the numbers are always complete and fit for purpose.
Only then can they be used confidently to guide decisions.
That’s the system we build at Insight Associates.
We ensure the transactional layer, the accounting layer and the financial leadership layer are all working together — so the figures you rely on during the year are already complete, accurate and dependable.
And, crucially, they’re actively used to understand your profitability, plan ahead financially, evaluate investment decisions and move your business forward.
If you’re unsure whether your current setup achieves that, I’d be happy to talk it through.
Simply email garry@insightassociates.co.uk or call us on 01279 647 447 to book a consultation with myself or with one of our specialists. We can review how your accounts are currently produced — and whether there’s an opportunity to give you clearer, more reliable numbers to guide your decisions.
Yours,
Garry
