3 Quick Checks to Spot Common Bookkeeping Errors

Spotting Common Bookkeeping Errors Early

Even with a capable bookkeeping team in place, small inconsistencies can still slip through. It’s not about a lack of skill — it’s simply the reality of managing day-to-day transactions in a busy business. That’s why many founders benefit from having a simple, high-level way to confirm their numbers are moving in the right direction.

The goal isn’t to re-do the bookkeeping work yourself, but to know where to look for early signs of trouble. These quick checks can help you spot potential bookkeeping errors before they affect your decisions — and give you confidence that your books are telling the right story.

1. Bank and Credit Card Reconciliations

Reconciliations are the foundation of accurate financials, yet they’re often treated as a formality. In reality, a small difference between your book balance and your statement balance is a signal that something is out of place — and the longer it’s ignored, the harder it is to fix.

• What to check: Confirm every bank and credit card account matches exactly to its statement ending balance.

• Why it matters: Differences often hide duplicate postings, missing transactions, or timing errors that can ripple through other reports.

• How to do it: Compare the statement and book balances. If they don’t match, review outstanding items and verify they’re legitimate, clearing or correcting anything that isn’t.

2. Negative or Unusual Balances

Certain accounts are designed to move in only one direction. When they show the opposite, it’s almost always a red flag. Payroll liabilities, customer deposits, and sales tax payable, for example, should never carry negative balances under normal circumstances.

• What to check: Scan your trial balance for accounts that show unexpected negative or unusual balances.

• Why it matters: These balances often mean a transaction was posted to the wrong account, coded in reverse, or not cleared when it should have been.

• How to do it: Identify the transaction that created the balance, verify it against the source documentation, and reclassify or correct it as needed.

3. Aged Receivables and Payables

Invoices and bills that linger for months without being cleared can quietly distort your financial picture. They may make your revenue look stronger, your expenses smaller, or your cash position healthier than it truly is.

• What to check: Review your aged receivables and payables reports for stale items that should have been resolved.

• Why it matters: Old items can inflate or understate key figures, leading to decisions based on inaccurate information.

• How to do it: Confirm whether each outstanding item is still valid. If not, apply a credit, write it off, or correct the posting.

When these checks become routine, they create a built-in safeguard for your numbers. You spend less time chasing down old problems and more time working from a set of books you can trust — and that trust is what makes your reports not just a record of the past, but a dependable guide for the decisions ahead.

Need numbers you can trust? Contact Brett J. Federer Accounting to learn more.