Most businesses don't decide to let their finances slide. It happens while everyone is busy doing the work that pays.
A few years ago I was brought into a creative group with several trading entities. The brief sounded simple enough: get the accounts into a state where they could be audited.
What that actually meant was several years of unreconciled transactions and intercompany balances that didn't agree with each other. The sales ledger was full of invoices nobody could confirm had been paid, and overdue returns were sitting with HMRC.
None of it was the result of carelessness. The business had grown, entities had been added, people had come and gone, and each handover had left a slightly less complete picture than the one before. That is how it usually happens.
Here is what the work involved, and the order it has to be done in.
Start with what you can prove
The instinct is to begin with the oldest problem. That's the wrong end.
The first job is to establish a position you can actually stand behind - usually the bank. Every account, every entity, reconciled against original statements rather than against what the accounting system says should be there. Where a bank feed had dropped out, we went back to the statements themselves and rebuilt the period by hand.
This is slow and it produces nothing anyone wants to look at. But until the cash position is right, everything downstream is guesswork. You cannot fix a ledger while standing on numbers you don't trust.
By the end of it we had a list of transactions we could not explain - payments in and out with no invoice, no reference and no obvious counterparty. That list becomes the real work.
Unexplained transactions are a question for the business, not the accountant
We took the unexplained items back to the people who ran the business. Some were recognised straight away. Some took a conversation. A few were never resolved and had to be treated on a reasoned basis and documented as such.
This is the part that Ozria clients are most surprised by, and it's worth being honest about it: your accountant cannot tell you what a payment was for. We can tell you it exists, when it moved, and what it doesn't match. The explanation has to come from the business.
The engagements that go well are the ones where someone on the client side takes that seriously and blocks out time for it.
Intercompany is where groups come undone
If a group has several entities, at some point one has paid for something on behalf of another. Do that for a few years without a consistent treatment and you end up with balances that don't mirror. Company A says it is owed one figure; company B recognises another.
Auditors will find this immediately. It has to be reconciled line by line, going back to what actually happened, then given a treatment that will hold going forward. That second half matters more than the first. Cleaning up intercompany without agreeing how recharges will be posted in future just books you a repeat of the same job next year.
Old invoices need a decision, not an inbox
The sales ledger had invoices going back years. Some had been paid and never matched off. Some had been part-paid. Some were for work the client had queried and no one had followed up. Some were simply never going to be collected.
Every one of them needs a decision: collect it, credit it, or write it off with a reason. Left alone, they inflate your receivables, distort your reporting, and give an auditor an obvious line of questioning.
Working through them also tends to recover money - chasing invoices that everyone had stopped believing in is often the fastest cash win in the whole project.
Overdue returns: file, then appeal
Where returns were overdue, the sequence is to get the filings in first and deal with penalties afterwards. HMRC is considerably more receptive to an appeal from a company that has brought itself up to date than from one still in default.
It's also worth knowing that overdue filings block things you might not expect. Companies you're trying to close can't be struck off while HMRC has an open expectation of a return. Businesses find this out at the least convenient moment.
Then, and only then, the audit pack
With the bank reconciled, intercompany agreed, the ledger cleared and filings up to date, preparing for audit becomes an exercise in documentation rather than investigation. Schedules, supporting evidence, an explanation for every material balance.
Auditors are not trying to catch you out. They are trying to satisfy themselves that the numbers are supported. If the underlying work has been done, the audit is straightforward. If it hasn't, the audit becomes the clean-up project - at a far higher hourly rate, and on someone else's timetable.
What actually changed
The visible outcome was accounts that could be audited and filings brought up to date.
The more valuable outcome was less dramatic: month-end became a routine rather than an investigation, and the leadership team could look at a set of management accounts and believe them. The same problems stopped recurring, because the processes that had produced them had been changed.
That group is now an Ozria retainer client. That progression - a defined remediation project first, ongoing finance support afterwards - is the pattern we see most often, and it's the right way round. There's little point putting a monthly process on top of records nobody trusts.
How to tell if this is you
- You don't know, today, what your cash position is across all entities
- Your management accounts arrive late and you don't fully believe them
- Intercompany balances don't agree between entities
- Your aged receivables include invoices you know you'll never collect
- You have a filing deadline you've already missed, or one you're going to
- Your last year-end took months longer than it should have
None of these are unusual, and none of them are permanent. They are just work that hasn't been done yet.
Ozria Consulting does this work for SMEs and high-growth businesses - the clean-up first, the monthly routine after. If any of the list above is familiar, book a discovery call and we'll tell you honestly whether you need a project or an afternoon.
