A Client Success Story: Why your Balance Sheet is Important

Last week, one of my favorite clients had a breakthrough. In fact, you might call it an

“Ah ha” moment.


Like most successful entrepreneurs, this client is focused on building relationships, deal

flow and customer service. His value add is ‘being there” for his customers when they

need resources to grow their own companies. He prides himself on being a responsive

business partner. He is outstanding in these areas, and is sought after as an expert in his

field. I have witnessed his consistent practice of placing his customer’s interests above his

own. His company is growing rapidly as a result.


What he does not focus on (as much) is his company’s financial statements, and

specifically his balance sheet. He asked me to help him to make improvements in this

area, but I suspect he viewed that as a means to an end (better access to capital to fuel

his own company’s growth) as opposed to a desirable result in its own right.


After all, a balance sheet is old news…right? It only shows what the company owned

and owed yesterday, or last month, or last year.


Timely and accurate financial statements don’t pay the light bill or put food on the

table…What good is that to a hard charging business owner who is focusing on finding

new business?


The answer is…Plenty. Which brings me to the breakthrough…to the “Ah ha” moment.


The (boring) Exercise

  • Reconcile a balance sheet account that I identified had to be wrong. We had to

dig into the source documents for the last 18 months.


The Payoff

  • I discovered an error in a settlement with a large customer. When this error is

corrected with the customer in the next settlement, my client will receive over 10 times

more than my fees to discover the error.


  • The error had occurred over a year earlier (before my engagement) and would not

have been detected if the owner had not committed to having an accurate balance sheet.


The Value I Delivered

  • Immediate payoff of 10x above the price of my services


  • Identification of weak internal systems that could lead to similar (potentially more

expensive) errors in the future.


  • A tangible reason to care about timely and accurate financial statements


You might ask why or how the error occurred in the first place.

The answer lies in the second paragraph above.


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