This describes a pattern we see repeatedly rather than one client. No client name, figure or result appears on this page.
The situation
The books stopped being kept at some point and nobody noticed until something forced the issue: a filing deadline, a lender, an investor, or a notice. By then the gap runs to several quarters and the records are spread across a bank, a card, a couple of platforms and an inbox.
The instinct is to start from the current month and deal with the past later. That is the one approach that reliably fails, because every period depends on the closing position of the one before it.
Why starting fresh does not work
- The opening balances for the current period are the closing balances of a period nobody has built
- The gap is exactly the period a tax authority, a buyer or a lender will ask about
- Stock, fixed assets and loan balances carry forward, so an unbuilt period leaves them unsupported for as long as they are held
- Filings already made on estimated figures cannot be reconciled to anything
How it gets done
Find the last point everything reconciled
That is where the rebuild starts. It is usually the last year that was properly closed, and its closing balances become the opening position.
Gather the sources before touching the ledger
Bank and card statements for every month, loan statements, payroll records, platform settlement reports, and the sales and purchase documents. Missing months are ordered now, because they take the longest to arrive.
Rebuild forwards, one period at a time
Each period is completed and reconciled before the next is started. It feels slower and it is considerably faster than correcting a year of compounding errors.
Deal with what cannot be evidenced
Some transactions will have no document behind them. They are recorded on the best evidence available, and what that evidence was is written down, rather than being quietly assumed.
Bring the current month current, in parallel
Otherwise the gap grows while the backlog is being cleared, and the exercise never finishes.
Fix the reason it happened
A backlog is a symptom. Whoever was responsible either did not have the time, the access or the information, and unless that changes the same gap reopens within a year.
What to expect
- Filings for the affected periods may need to be made or corrected, and doing that voluntarily is materially better than waiting
- The rebuilt figures will differ from anything previously estimated, and the differences need explaining rather than hiding
- The first genuinely clean close is the point at which the work is done, not the day the last period is entered
Explore related services
Often paired with Agency Gross Vs Net Billing, Finance Cost Comparison Calculator and Monthly Reporting Pack.
Books Behind?
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