How to review books after a CFO departure: four areas first

Knowing how to review books after a CFO departure starts with four areas: cash, what the company owes, what customers owe it, and the monthly close that feeds every report. Done well, this review shows what the company has, what it is committed to, and which numbers you can trust for the next decision. Everything else can wait until those four are solid.

Start with cash, since every other number depends on it

When a CFO leaves, the first thing to check is simple: how much cash is in the bank today, and does the accounting system agree? Many owners find that the balance in their software and the balance at the bank have drifted apart over a few months. A bank reconciliation compares each account line by line against the bank statement, and it exposes the small gaps that tend to hide in plain sight.

In practice, pull statements for every account the company uses, including operating and savings accounts, merchant processing deposits, and any card that moves company money. Download them from the bank’s own portal rather than accepting a spreadsheet someone prepared for you. Then ask who holds login access to each account, and whether that access still makes sense now that the person who handled it has left.

Next, look at the trend rather than the single balance. A healthy-looking balance can hide a pattern where customers pay late and vendors get paid on time every month. Put the last several months of deposits and payments side by side. Once the pattern is visible, a short cash forecast covering the next few months gives you something to plan against, even if the numbers are rough at first.

Here is a hypothetical example. Imagine a small retail shop whose operating account looks comfortable on a Monday morning. Two large card settlements are still pending, a quarterly tax payment is due before the next wave of sales arrives, and a supplier has asked for payment in advance. Nothing is broken yet, but the owner now knows the cushion is thinner than the headline balance suggested.

What changes next is your ability to make decisions. Once cash is confirmed, you can decide whether to delay a purchase, adjust a hiring plan, or talk with a lender from a position of clarity. Until then, every other decision rests on a number nobody has checked since the last close.

Confirm what the company owes before you trust the profit line

A profit number means little if the liabilities behind it are incomplete. After a CFO departure, the most common gap is rarely a missing invoice. It is an obligation that was handled from memory, such as a payroll tax deposit or an annual license renewal that nobody wrote down. Start by listing every category of money the company owes, then check each one against source documents.

Here is a practical list to work through. Each item should have a balance, a due date, and a named person responsible for paying it.

• Accounts payable aging, so you know which vendor bills are overdue and which are simply due soon
• Payroll taxes and withholdings, with proof that deposits reached the IRS and state agencies on schedule
• Sales tax collected and remitted, reconciled to returns filed with the Massachusetts Department of Revenue
• Loan balances, payment schedules, and any covenants the lender expects you to report on
• Credit card balances and other short-term borrowing that may not appear in the main accounts
• Accrued expenses for work or services received but not yet invoiced

The reason accruals matter is timing. If a consultant worked during the last weeks of the quarter but sent the invoice the following month, the expense belongs in the earlier period. Without that accrual, the profit line looks better than it is, and the owner makes decisions based on a flattering figure.

Pay attention to anything that depended on the former CFO’s judgment, such as a reserve for a disputed bill or a payment plan agreed to by phone. Those items rarely appear in a standard report, yet they change what the company really owes. Ask for the files, emails, and calendar entries that show where those agreements live.

In practice, you may not need to finish the whole list in one sitting. The goal of this step is to know which obligations are confirmed, which are still guesses, and which need an answer from a vendor or agency this week.

Review what customers owe you and whether revenue was recorded on time

Money owed to the company is only useful if it can be collected. Start with an accounts receivable aging report, which groups open invoices by how long they have been unpaid. Invoices that are a few days late need a reminder. Invoices that are several months late need a decision: follow up, negotiate a payment plan, or write them off.

Revenue timing is the next question, and it matters more than many owners expect. If a customer paid for work that has not been delivered, the cash is in the bank, but the revenue belongs in a later period. The rules for contracts with customers are set out in ASC 606, the revenue recognition standard used under U.S. GAAP, so a reviewer should check whether that guidance was applied consistently.

Deferred revenue is where this often shows up. Retainers, prepaid subscriptions, and deposits sit as liabilities until the company earns them. If those balances were never adjusted, the profit line can jump in one month and drop in another for no operational reason. Look for large round payments that were booked straight to income.

Here is a hypothetical example. A small consulting firm receives an advance payment for a six-month project. The former finance lead recorded the full amount as income in the first month, so the statements showed a strong quarter. The reviewer moves the unearned portion to a liability and spreads the revenue across the project. The quarter looks more modest, and the next conversation with a lender starts from a more accurate base.

What changes next is how you read customer data. A clean aging report tells you which relationships are healthy and which need attention. Once receivables and revenue are sorted, sales decisions and cash forecasts start to agree with each other.

Check whether the monthly close still works without the person who ran it

The monthly close is the routine that turns raw transactions into reliable reports. When the person who ran it leaves, the routine often survives on habit alone, and nobody can explain its steps. The review should write down what actually happens each month, not what an old process document says should happen.

A workable close usually follows a clear order. Use this sequence as a starting point and adjust it to the size of your team:

1. Post all bank, card, and payroll activity so that every transaction is in the ledger.
2. Reconcile each cash account to its bank statement and investigate any difference.
3. Record accruals and deferred revenue adjustments for the period being closed.
4. Review key balances, such as payables, receivables, and payroll liabilities, for anything unusual.
5. Lock the period so that later edits require a visible approval trail.

Controls decide who can change the books. In a small company, one person often posts entries, approves them, and reconciles the same account. That setup is common, but it means nobody else is checking the work. Separation of duties does not require a large team. It can be as simple as having someone other than the poster approve journal entries above an amount you set.

Check permissions inside the accounting platform itself. Tools such as QuickBooks and NetSuite let administrators limit who can edit closed periods, approve bills, or change chart of accounts settings. Former staff may still have access, and shared logins make it hard to trace who changed what. Remove access that no longer fits, and Boston record who holds each remaining role.

In practice, the close is working when the same steps happen in the same order each month, and when the person reviewing the work can explain every adjustment without digging through old emails. If that is not true yet, the close is the first thing to repair, because every report built afterward depends on it.

Test whether the reports you use for decisions match the ledger

Reports are only as good as the ledger underneath them, so test them before you use them. Start with the balance sheet and profit and loss statement for the last closed month. Confirm that the balance sheet balances, that cash matches the bank reconciliation, and that receivables match the aging report. Small mismatches are signals, not noise.

Budget versus actual reports deserve the same scrutiny. If the budget was built by the former CFO using assumptions nobody wrote down, the variances may point to the wrong problems. Ask who approved the budget, when it was last updated, and which assumptions still reflect how the business operates today.

Investor and lender packages are the highest-stakes reports. A lender or investor will ask how a number was built, and an answer that depends on someone who has left is weak. Trace the key figures in those packages back to source documents, and keep a short note on each adjustment you made so the story holds up in a follow-up meeting.

Here is a hypothetical example. A services company shows a profitable year on its summary report. When the reviewer ties that report to the ledger, several large vendor bills from the final quarter were never recorded. The profit only existed on paper, and the owner had been planning a hire based on it. Catching the gap before the lender call is far better than explaining it afterward.

What changes next is confidence. Reports that tie out let you present numbers without hedging, and they give whoever leads finance next a reliable starting point rather than a puzzle to solve.

Decide who runs the review: interim, fractional, or permanent support

Once you know what needs checking, you have to decide who does the work. The three common options are Interim CFO Hourly Rates In Massachusetts CFO support, fractional CFO support, and a permanent CFO hire. They differ in how much time they cover, how long they stay, and how well they fit the company’s current structure. None is the right answer by default.

The right setup depends on the decisions piling up, not just the company’s headcount. An interim leader fits when a gap has to be covered while you search for a permanent hire, or while the company works through a defined project. A fractional leader fits when you need regular senior input without a full-time executive role. A permanent hire fits when the workload is steady and the role will remain in the structure for the long term.

Whatever the model, ask for the scope in writing. Pricing, timelines, and results vary widely from one company to another, and no provider should promise outcomes for your business before it has seen your books. A clear scope protects both sides and makes it easier to compare options on equal terms.

A useful test is to ask each option how it would handle the review described above. Who would reconcile cash first? Who would own the close calendar? Those answers show more about fit than a title or a long list of past roles ever will.

Set the first weeks around decisions, not a generic checklist

Whoever leads the review needs a starting point. In the early weeks, the goal is not to fix everything. It is to learn the company well enough to set priorities that matter for the decisions ahead. A generic onboarding checklist can waste time on tasks that do not affect anything you need to decide.

Start with access and records. The new leader should have working access to bank accounts, the accounting platform, payroll, and the shared drive where contracts and agreements live. Ask for the former CFO’s notes, if any exist, and treat them as leads to verify rather than facts to accept. A short starting set usually includes:

• A short list of the decisions the review must support in the coming quarter
• Access to every system that holds company money or financial records
• Named owners for each recurring task, from invoicing to payroll filings
• Open questions, each with a date by which it needs an answer

Then run an initial diagnosis. Compare the four areas in this guide against what you find, and rank the gaps by how much they could affect a decision in the next quarter. A missing sales tax filing matters more than an untidy chart of accounts, even though both need attention.

What changes next is the priority list. Keep it short, usually a handful of items, and give each one a named owner and a clear definition of done. Share it with the people who depend on the numbers, so the review is visible and not a private project that only one person understands.

In practice, the early weeks are working when open questions shrink, the owner can explain the cash position without preparing for interim CFO hourly rates in Massachusetts the conversation, and the team knows who to ask about each recurring task. If the list keeps growing without anyone closing items, the scope is probably too broad.

Judge the review by whether your numbers hold up under questions

A review can feel productive and still leave the numbers unreliable. A better test is whether the company can answer ordinary questions without scrambling. Can the owner explain cash on any given day? Can the close finish in a predictable window? Do the reports tie out without manual patches? Those questions are concrete, and they do not depend on anyone’s opinion of the work.

Ask whether the close is repeatable. If the same steps produce the same kind of result each month, the process is working. If each close depends on one particular person remembering one particular step, the process is still fragile, even if the reports look clean for now.

Check whether decisions have changed. A review that improves visibility should show up in choices: a purchase timed to the cash forecast, a pricing change based on accurate margins, or a lender conversation that starts from reconciled statements. If nothing in how the owner decides has shifted, the review may have been too narrow to matter.

At the end of the review, write down the answers to a few questions and date them:

• Does the cash balance match the bank statement for every account?
• Do the balance sheet and aging reports tie to the ledger?
• Are approvals for entries and payments clear and recorded?
• Could another qualified person run the next close from the written steps?

Success is not a promise that the business will grow, raise money, or sell. A review can only make the foundation trustworthy. What the company does with that foundation is a separate decision, and it deserves the same care.

The costliest mistake is trusting old reports while you wait to fix them

The most expensive mistake after a CFO departure is treating the last set of reports as correct until someone has time to check them. It feels efficient to keep operating on familiar numbers, especially when the calendar is full. The problem is that every decision made in the meantime inherits whatever errors the old process left behind.

This mistake shows up in predictable ways. The owner approves a hire based on a profit line that was never adjusted. A cash forecast assumes receivables that were never collected. A lender receives a package that cannot be traced back to the ledger. Each one looks minor when it happens, but the cost arrives later, usually when the stakes are higher and the room for correction is smaller.

The fix is to start the tie-out work now, even before the full review is done. Label figures as unverified until they pass the checks in this guide. Hold off on large commitments that rely on a single unconfirmed number. If a decision cannot wait, write down what you knew, what you assumed, and what you have not yet verified.

Limits matter here too. Some errors cannot be found quickly, especially when records are incomplete or when systems were changed over several years. In those cases, the honest answer is that some balances remain uncertain, and that uncertainty should be stated plainly to anyone who relies on the numbers.

In practice, avoiding this mistake comes down to one habit: every report you use has a known source, a known check, and a known date. Once that habit is in place, the review stops being a rescue and becomes the normal way the company reads its own numbers.