After spending a lot of time with distressed business clients, it's clear that management-controlled books are often incomplete at best.
If there’s one lesson I’ve learned working on hundreds of clients in dozens of different industries, cash flow is everything. Standard accounting procedures if controlled properly, do a fine job of tracking how/where money is made and spent. However, after spending a lot of time with distressed business clients in the underwriting, restructuring, workout, and Chapter 11 commercial bankruptcy world, you quickly realize accounting procedures aren’t always followed as they should be and management controlled books are often incomplete at best and inaccurate at worst.
As an objective financial/accounting professional working to establish an independent view of the financial situation, 3rd party validated cash flow (aggregating all bank account activity) is the only way to sort out the mess and understand the truth.
99% of accounting is the categorization of past and anticipated cash flows.
Ultimately, everything in accounting (outside of non-standard estimates like Black-Scholes share valuation and product liability) maps back to cash. If you have the comprehensive knowledge about cash flow, you understand the business operations better than anyone. In a well run, profitable, successful business management has the luxury of only needing to “check in” once a month to make sure accounting records are reconciled with the bank accounts. But for the hundreds of thousands of distressed low margin businesses, corporate restructurings/turnarounds, and commercial bankruptcies a standard month end close and standard financial statement audits are not sufficient. These situations are why I founded Valid8.
The amount of time and effort to clean up accounting records, figure out where did the money go, and establish a baseline for business planning is overwhelming, error prone, and manual. In this age of data, analytics, automation, and artificial intelligence, there should be a better way. Valid8 is designed to tap into the all the efficiencies offered by modern technology to eliminate the data cleanup/prep work and speed professionals to analysis.
If you are a professional that needs too:
- Establish an independent, objective view of financial situation.
- Verify accuracy and validate the integrity of accounting records.
- Provide precise, accurate weekly or even daily views of cash positions.
Please reach out, Valid8 can help.