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The Hidden Costs and Big Wins of Financial Data Cleanup


Soni Kastner | CEO & Chief Financial Strategist
Soni Kastner | CEO & Chief Financial Strategist

Introduction


Data cleanup isn’t just a back-office chore—it’s a business health check. Whether you’re running a startup or leading a mature enterprise, the quality of your financial data shapes your decision-making, compliance, and credibility. In this post, we’ll explore the real challenges, the risks of ignoring them, and practical ways to get your financial data in top shape.



The Common Challenges


Many organizations—big, small, nonprofits, and even some with accountants—fall into habits where they don’t clean up their financial data. I see two main types of issues:


  1. The busy small business or nonprofit: They have too much to do, so financial records aren’t reconciled monthly. They plan to come back to it, but time never allows.

     

  2. The established organization: Small businesses or nonprofits with a bookkeeper or accountant who isn’t thorough in their work.

 

Examples:


  • A year ago, I worked with a client who hadn’t done any cleanup for two years. They had multiple bookkeepers who weren’t fully equipped for the task. Under my guidance, we reviewed all transactions, reconciled bank accounts, and created a new Chart of Accounts aligned with their industry and reporting needs.


  • Another client had a Director of Finance who had never completed bank reconciliations because previous reconciliations were neglected. The biggest challenge here was gathering two years’ worth of statements and quickly balancing the accounts.



Why It Matters: The Stakes of Messy Data


Messy or inaccurate financial data can lead to real-world risks and costly consequences:


  • Unclear revenue and expenses: Without clean data, you don’t truly know what you spent or received.

  • Bank reconciliation issues: If accounts aren’t reconciled, income or expenses may be double-counted or misrepresented. Imagine informing your board that prior numbers were incorrect—it raises questions about credibility.

  • Misclassified transactions: Wrongly categorized expenses and revenue make planning difficult.

  • Stress during audits or funder requests: Messy books can lead to panic when financial statements are needed quickly, often making cleanup worse.

 

Myth to bust: Don’t be embarrassed by messy books. Every organization needs data cleanup. Staying ahead now is far better than scrambling during an audit.

 

Example:


A potential client needed financial statements to secure a loan. They hadn’t completed data entry for a month and spent an entire night catching up to provide a Profit & Loss statement to the bank the next morning.

 

Food for thought: What if each audit required minimal Adjusting Journal Entries? That’s been my goal for the last 10+ years—easier, clearer audits should always be the target.



From Chaos to Clarity: Proven Strategies


Here are practical strategies to ensure a successful financial data cleanup:


  1. Clean up data monthly and use a month-end checklist.

  2. Reconcile bank accounts monthly and review reconciliation statements.

  3. Ensure your Chart of Accounts (COA) makes sense for your organization. Have an expert review it and offer suggestions, while communicating what you want to see.

  4. If books are messy, start with the year after you last filed taxes.

 

Mindset Matters:


Think of your financial records as a roadmap. If it’s outdated, you can’t reach your destination. Employees trust leaders who can speak confidently about the company’s financial situation.

 

Examples:


  • I helped an organization regain confidence in their finances after outsourcing accounting for a while. Clean financials allowed leadership to communicate clearly with stakeholders and boosted team confidence.


  • One client struggled with budgeting because they didn’t trust their numbers. With clean financials, budgeting became much easier.

 

Food for thought: Do you consider your employees stakeholders of your organization? Are you leading them with confidence?



Speaking the Right Language


When speaking to business leaders about financial data cleanup, I find it most effective to take an informative and reassuring tone. I emphasize why data cleanup is important and assure clients that some adjustments are always part of the process. At the same time, it’s crucial to confirm with clients whether they’re comfortable making changes to prior period reports before proceeding.

 

Examples:


  • A new client believed their books were in order, but onboarding questions revealed cleanup was needed. Together, we clarified their expectations and organized the finances.


  • I make sure clients understand the results they will see. For one client, we reduced 207 accounts to 112 in the new COA, including headers. They often thank me for the clarity of their financials.


  • Another client improved their invoicing process so income reflects correctly in the books.

 

Tip: Meet clients where they are. Speak their language and collaborate with accounting staff to ensure everyone is aligned.



Benefits of Financial Data Cleanup


  • Accurate, easy-to-run financials—you always know your numbers.

  • Timely, reliable reports for leadership, boards, and audits.

  • Greater organization and confidence, which often extends beyond finances.

  • Cost savings—tax professionals charge more to clean disorganized data. Accurate numbers mean taxes can be completed efficiently.


Conclusion


Financial data cleanup might not be glamorous, but its impact is transformative. By recognizing risks, addressing root causes, and fostering a culture of accuracy, businesses can prevent costly mistakes and gain a clearer, more confident path forward.



Ready to take control of your financial data?


Start your cleanup today and experience the clarity, confidence, and peace of mind that comes with knowing your numbers are accurate.




 
 
 
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