I recently took a trip to New England to see the renowned fall foliage of the area. Rest assured, I was not disappointed. The scenery was breathtaking. In preparation for our trip, I did a lot of research, talked to a lot of people, particularly people who had been there, and one lady who was raised in Boston. When I told her I was going, she got so excited to tell me all there was to do and see there. She asked if I had a map of the area. When I told her I had an atlas, but that was all, she immediately volunteered to bring over all of her maps of New England and help me plan for my trip. So, I was excited to get all of her information, maps, and insider information to make our trip one we wouldn’t forget.
Interestingly, when she brought us the maps, they were from the 1970’s. Although the maps were old, I thought, this area is the oldest in the country, how much could it really change. So, we took her maps and off we went.
When we finally got to part of the trip where we were going to Boston, my wife pulled out the map, and was ready to help guide me right to our hotel. As we got closer to Boston, we started looking for the appropriate exit to get off the freeway, and all of a sudden, we entered a tunnel and we had no idea where we were. There were exits in the tunnel, but we didn’t know which one to take. All of a sudden, we came out of the tunnel, but we had past Boston. So we had to dig out the hotel reservations and have them give us directions to get there. My friend who grew up in Boston failed to mention to us about “the big dig” in Boston where they moved the freeway from above ground to underground and all of the maps before this had happened were out of date and useless.
I tell this story as an analogy to having up to date and accurate financial statements. Recently, I was visiting with a client and we were reviewing their financial statements. As we were talking about accruals and other month end closing procedures, the comment was made, we don’t do that, it is too much work. As I went on to explain to them the importance of making all of the appropriate accruals and closing the books properly, my experience about having a map that was outdated and useless came to mind. If we don’t update our financials on a regular basis, make the appropriate accrual and closing entries, and prepare them accurately, all we end up with is the same useless map that I had in Boston and they don’t give us a true picture of where the company is, where it is going, and how to get where we want to go.
Utilizing financial professionals to ensure that your books are closed correctly, your financial statements are accurate, and your “road map” for your company is up to date will ensure you don’t get lost like I did, but on the contrary, can help guide you to your destination without getting lost. You don’t need a new map, you just need to make sure the one you have is accurate and can get you where you need to go!
