Data is only good to you if it comes to you clean

One of the first things I ask any business owner when I work with them is how clean is your data.  Often perplexed by this question I find myself explaining what clean data is. And put simply clean data is accurate and timely financial data, with the focus of having it clean enough to work with and use it for good.  Whether we are relying on someone else to prepare our financial information, or whether we are doing it ourselves, getting our data accurate in the system in a timely manner to make business decisions is imperative.  And should be top of your list when working with your numbers.

You see whilst we have loose reporting requirements for our financial information, it’s not a race.  Getting your information accurate and complete is more important than meeting any deadline.

So what is it that you should be looking for and doing to ensure that your data is clean?

1.      Set aside uninterrupted time to enter your data

We are all prone to mistakes when we’re busy, so it’s important to make sure that when you are taking the time to enter your financial information whether it be in your online system or on a simple spreadsheet, that you aren’t doing anything else at the same time.  Being distracted is a primary cause for making mistakes.  It could be something as simple as entering wages as revenue.  In doing so you would overstate your revenue and understate your wage expense.  This would increase your profit and therefore you would make decisions based on an increase profit.  This could significantly damage your cash flow.

So, take a moment, set aside some time, and ensure that the point of entry your financial data is accurate.

2.     Review your financials frequently

Your financial information should never be set and forget.  Especially if you have somebody else preparing it for you.  Whilst it’s important to trust the external party preparing your information, it’s just as important for you to check their work.  Even if they are the expert in accounting, just remember you’re the expert in your business.  Therefore by checking your financials frequently, you will understand more how the information hangs together, and be able to clearly identify when something doesn’t seem right.  But without that check, key information can go unaddressed and cause significant impacts on a business.  And you don’t want to find out what they are when it’s too late.

3.     Get to know your numbers

As mentioned above, you are the expert in your business.  So be an expert in all aspects of your business.  Spend some time understanding how your information hangs together, ask relevant questions if you don’t understand something, and be sure to do this frequently.  After all practice makes perfect.  Knowing your numbers will provide you with a great deal of power in your business.  You will see very clearly your direction, understand how to measure success in your business, learn how to address any changes and their impact, and know the outcomes true performance of your business.

It’s the point where we come full circle, understanding our business well enough to be able to identify the numbers and ensure the accuracy and cleanliness of the information by which we are making our business decisions on.