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financial reporting

General Ledger Clean-Up: Identify and Fix Your GL Problems


To state the obvious, your general ledger is kind of a big deal. Without the kind of. It collects your transactional data, feeds your reporting, and is the bedrock of your entire accounting function. Therefore, it only makes sense for a company to keep it neat and tidy. If you don’t, that trial balance could get ugly, your statements late to the party, and don’t even get us started on your audit. And you’re just too good of an accountant to let that happen.


Unfortunately, cleaning up your general ledger isn’t always easy and fast, at least without the guidance of some GL superstars. So to help keep your ledger crisp and clean like those hospital corners on your bed – you do make your bed before leaving for work, right? – Embark has a few insights to share from the frontlines. Just remember, if you notice some similarities between our musings and your own general ledger, it’s entirely fixable with a bit of elbow grease and some experts leading the way.


Common Causes to a Tattered General Ledger

Every company, industry, and business environment is unique, making the root causes behind a tattered GL somewhat broad in scope and not always easy to diagnose. However, from working with businesses of all shapes and sizes, we’ve identified a few common traits that often accompany trial balances about as reliable as a 1970’s station wagon.


The Downside of Growth

Growth is exhilarating. It’s why people start companies in the first place. Whether an exploding startup or a grizzled old business that creates a must-have widget, periods of growth shift focus from today’s operations to the shiny road ahead. However, shifting that focus can really gum up your accounting machinery at a time when accurate and prompt books are imperative.

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As much as it pains us to say, the accounting function is often quickly neglected during those exciting times, as businesses divert resources to fuel the fire of growth. This notion is especially prevalent in smaller companies that didn’t have much staff to begin with. Ultimately, there just isn’t enough time or people to go around and, as a consequence, even something as important as the general ledger can fall into disarray.


Stakeholder Ire

We don’t mean to imply that a messy general ledger stems exclusively from growth, although it’s the most common culprit. It can happen to any organization that doesn’t devote sufficient talent, technology, and attention to the accounting function. Sure, private companies are more apt to let their general ledger get tangled and torn, typically lacking the controls of their public brethren, but even public companies can let their GL get away from them.

Public or private, startup or mature, it’s more often than not a scolding from an auditor, banker, investor, or some other key stakeholder that snaps the company back to attention. By that point, although cleaning up the general ledger remains a priority, the damage is often done. Debt covenants, relationships with investors, and several other essential factors to success can suddenly find themselves on shaky ground. And that’s just not good.


Continuity-Busting Turnover

The accounting function is already prone to high turnover levels, the product of a much larger discussion involving concepts like employee engagement and corporate culture. From a ground-level perspective, however, that turnover can wreak havoc on the many processes that feed into the general ledger.

For instance, a revolving door at the CFO or controller levels can destroy any sense of continuity that plays such a vital role throughout an organization. If a CFO instills new processes and procedures to tackle a particularly messy accounting function, but then heads off to greener pastures, those new processes often fall by the wayside. To make matters worse, the search for a new CFO can take a good amount of time. In the interim, those accounting issues only get worse, making life especially difficult for that new CFO once they become aware of the situation.


Breathe New Life Into Your General Ledger

As ominous as all of that might sound, fixing a broken general ledger doesn’t necessarily have to be complicated or even difficult. In fact, just a handful of best practices can breathe new life into your GL and forever remove the dunce cap from your haggard trial balance.


Account Reconciliation

What might sound like common sense often goes unaddressed in companies with GL issues. Something as straightforward as account reconciliation, particularly cash, can resolve many inaccuracies within a general ledger. It doesn’t matter if you’re a technology startup, a chain of grocery stores, an auto repair shop, or a yoga instructor, cash is still king. You must always have an accurate measure of your cash, where it’s coming from, what you’re spending it on, and, just as importantly, be able to demonstrate those accurate figures to – once again – your auditors, bankers, investors, and more.

To that point, Embark’s exceptionally handy – and free – account reconciliation template is yours for the taking, customizable for your specific operations and needs. As simple as our template is in both design and function, we’re sure you’ll find it extremely helpful in properly aligning your cash and other balance sheet accounts. That is, unless you want your auditor to be the person to discover your consistently double-paid electricity bill. Because that’s always a hoot.

Need a GL cleanup? We can help.


Document Everything

So you’ve finally gotten tired of having a GL that looks more like a Jackson Pollock than the centerpiece of your accounting. You’ve integrated new processes and controls to get everything under control, and you’re well on your way to a trial balance that doesn’t make your CFO want to hide in the second-floor storage room. We congratulate you on a job well done.

However, depending on the complexity of your adjustments, your path to a cleaner general ledger could be confounding to someone outside the process. It’s just no fun going through all of that work to only leave a zigzagging trail that gets your auditor lost in the accounting woods. Therefore, documenting everything is of absolute importance, making sure you can justify your balances with support that lets your auditor get from point A to point B without much head-scratching.


Advice From the Experts

Embark knows your situation could be very different than someone else’s, so always be mindful of the dark and evil forces that might be specific to your accounting department, organization, or even industry. Also, make accounting a priority, and equip it to grow seamlessly with your operations. Invest in scalable technology early to keep your GL on the straight and narrow. And, of course, if all this seems a bit overwhelming, Embark is always ready, willing, and able to cleanup your general ledger and transform it into a point of pride and reliability.