The foundation of everything. Bad bookkeeping means a bad model — no exceptions. That’s why bookkeeping quality assessment is always step one of an IFM review.
BKQA asks a simple question: is the underlying data clean enough to trust? Concretely: are accounts reconciled, do bank balances match book balances, and are there stale unresolved transactions parked where nobody looks?
The Common Failures
The same problems appear over and over across small-business books:
- Cash deposits not grossed up — deposits recorded net of merchant fees and credits, understating both revenue and expenses
- Bill-pay blind spots — payment platforms that obscure what was actually paid to which vendor
- Accrual reversals clouding the weekly picture — timing entries that make weekly numbers unreadable
- Expenses hitting accrual accounts directly — bypassing the categories where anyone would look for them
- Journal entries netting to zero — technically balanced, informationally empty
- Reclassifications creating phantom transactions — the same dollar appearing to move twice
None of these show up as “errors” in the accounting system. The books close. The reports print. And the signal is gone — which is what makes them dangerous.
Hard Rules
Rules we hold across every set of books we touch:
- Sub-accounts only. Never post to parent accounts. Parent-account postings make category totals unauditable.
- Payee names on every transaction. Batch-accepting bank feeds without setting payees creates data that can’t be analyzed by vendor — which means it can’t be analyzed.
- Understand the business before categorizing. Categorization without context is guessing with confidence.
Why It’s Step One
See Signal vs Noise: clean books are the signal, and every failure above is noise that compounds downstream. A forecast built on unreconciled books isn’t conservative or aggressive — it’s fiction.