Bad financial data doesn’t just cause embarrassment in board meetings. It has a quantifiable cost — and it’s usually much higher than companies realize.
Direct Costs
Mispriced products due to inaccurate COGS calculations. We’ve seen companies underpricing by 15-25% because they weren’t properly allocating fulfillment and support costs. On $10M in revenue, that’s $1.5M-$2.5M in margin left on the table annually.
Delayed fundraising because financials aren’t investor-ready. Every month of delay costs you in dilution, opportunity cost, and competitive positioning. We’ve seen founders spend 3-6 months cleaning up books that could have been maintained properly from the start.
Indirect Costs
Poor decisions made on flawed information. Hiring too fast based on inflated revenue projections. Under-investing in a profitable product line because margins appear worse than they are. Missing cash flow problems until they become emergencies.
Lost investor confidence. Once an investor finds errors in your financials, every number becomes suspect. The credibility tax is enormous and lasts long after the errors are corrected.
The Fix
Financial data quality isn’t a technology problem — it’s a process problem. Monthly reconciliation, consistent categorization, proper revenue recognition, and regular review by someone who knows what good looks like. A fractional CFO can establish these processes in 30-60 days.
Do This Monday
- When was your last bank reconciliation? If it’s more than 30 days old, that’s your first priority.
- Pull a random month’s P&L. Can you explain every line item? If there are large “miscellaneous” or “uncategorized” amounts, your data quality needs work.
- Ask your team: how confident are you in our financial numbers on a 1-10 scale? If it’s below 8, invest in fixing the foundation.
If you want help getting your financial data right, book a free consultation →