You’ve probably heard the saying…
Garbage In = Garbage Out (GIGO)
But what does this have to do with accounting, bookkeeping, or forecasting?
The Importance of High Quality Bookkeeping Data
Good data isn’t just about keeping track of ones and zeros, it’s about giving you the ability to recognize opportunities and potential challenges.
If your forecasts or any other analysis are built on –garbage data – how can you and your clients expect to trust what you’re telling them? Or better yet, how can you even begin the work if you can’t get the data you need in a timely manner (if at all)?.
We’ve all felt the pain of messy data at one point or another (or maybe it’s an ongoing challenge). Below we’ll discuss the two key fundamentals you need to land in order to get high quality data.
Plus we’ve included a link to – bookkeeping wiz – Kellie Parks’ session from the Outsourced Controller Bootcamp on the importance of keeping clean, consistent bookkeeping files, and how she helps her clients get (and maintain) great data. Watch Kellie’s session here.
Getting High Quality Bookkeeping Data:
There are two key fundamentals in the bookkeeping process that ensure high quality data.
High quality data is:
1. Accurately coded
2. Consistently coded
Two very similar ideas, yet different, and equally important.
1. Accurately Coded Bookkeeping Data
Accurately Coded Data means data that has been verified against source documents whether by you or your client. The importance is that you have some sort of quality assurance process in place as part of the bookkeeping process.
When dealing with financial data it can be easy to take it at face value, so if you’re not the one doing the data entry a lot of inaccuracies can persist. Not verifying this data can skew historical results, which then skews your forecasts as they’re often based on historical estimates.
Inaccuracies can be as simple as having the wrong date or amount (oops), but they can also be something as fundamental as expensing a purchase when it should really have been capitalized.
Ultimately inaccuracies prevent you from creating useful forecasts.
2. Consistently Coded Bookkeeping Data
Consistently Coded Data is related to accuracy in that, the data needs to be coded accurately the exact same way every time in your accounting systems – always. (Yes really, accuracy and consistency are your new B.F.Fs). If not, again, it’s going to skew your historical data and, you guessed it, your forecasts.
Remember trends are your friend, and the more accurate and consistent the data in your accounting system the more likely you spot trends and create the best forecasts for your client.
So, unless your client happens to be Oscar the Grouch, remember to avoid GIGO (Garbage In, Garbage Out) when forecasting. The key to this is ensuring your data is accurately and consistently coded.
BONUS: The Importance of Keeping Clean, Consistent Bookkeeping Files
Join Kellie as she discusses the importance of keeping clean, consistent bookkeeping files as part of The Outsourced Controller Bootcamp.
Have questions? Reach out at: [email protected] or connect with us on LinkedIn!
