Your books balance. The trial balance adds up and your accountant signed last year off without a murmur. And the numbers you are running the business on are still wrong.

That is the uncomfortable thing about bookkeeping errors. The ones that stop the books balancing get caught, because something visibly breaks. The five below break nothing. The accounts still add up, and the figure you use to decide whether you can afford a hire is out by thousands for months.

1. Last month's supplier bills are not in yet

This is the big one, and the hardest to spot, because it makes the business look better rather than worse.

Sales invoices go in quickly, because you raise them. Supplier bills arrive by email, get set aside, and go in when somebody has time. If half of last month's costs have not been entered, last month shows up as your most profitable month in two years.

The figures here are invented to show the mechanics, not a claim about any real business. Say a month reports £120,000 of sales against £26,000 of costs, so a £94,000 profit. The same business entered between 75 and 180 supplier bills a month last year, and entered 19 last month. Those costs are not low. They are not typed in.

The tell is not the money, because a cost total that falls is not evidence about itself: a quiet month might be completely real. The tell is the count of supplier bills dated in the month, against what you normally enter. How many bills got keyed in is a separate fact from how much you spent.

So before you read any month's profit, check how many purchase invoices are dated in it. If the count has collapsed, the month is not finished, whatever the report says.

2. Treating invoiced sales as revenue

If you are VAT registered, your sales ledger and your profit and loss statement are measuring two different things. The ledger holds what you invoiced, VAT included. The P&L holds revenue, VAT excluded. Invoice £120,000 in a month at the standard rate and your revenue is £100,000. The other £20,000 was never yours.

That is harmless until you mix the two in one sum, and the classic version is debtor days. Take debtors from the ledger, with VAT in them, divide by revenue from the P&L, with VAT taken out, and you overstate how slowly you are paid by about 20%. Then you have an awkward conversation with a customer who is paying you on time.

The fix is a habit rather than a calculation: take both numbers in a ratio from the same place, never one of each. CFO Pal computes debtor and creditor days from the invoice ledger on both sides for that reason, and says so on the figure itself.

3. Customer deposits sitting in income

Money in the bank is not money you have earned. Take a 50% deposit in March for work you will deliver in June: the cash arrives in March, but the income belongs to June.

Recorded as income in March it inflates that month and starves June, and your margin then swings for reasons that have nothing to do with how you trade. Recorded properly it sits on the balance sheet as a liability, usually called income in advance or deferred revenue, until the work is done.

One side effect is worth knowing about. Because a deposit balance is a liability that is not a loan, it can end up folded into a borrowings total. A business with no debt at all then appears to owe tens of thousands, so look at what is actually inside any loans figure before you repeat it to a bank.

4. Costs that never got classified

Most systems will let a cost account sit with no category, or let everything land in one general overheads bucket. Again, nothing breaks and the P&L still totals correctly.

What you lose is the split between costs that rise with sales and costs that do not, and without it there is no gross margin. You can see whether the business made money. You cannot see whether each sale makes money, which is the question that tells you what to do next.

This is worth fixing once, properly, rather than at year end. CFO Pal states no gross margin at all until every cost account that has moved money has been answered as a job cost or a running cost, and holds its margin alert switched off until they are. A margin figure resting on an unclassified account is worse than no figure.

5. The bank account nobody reconciled

A cash figure is only as good as the reconciliation behind it. If the ledger says £38,000, the bank says £31,000, and nobody has matched them for six weeks, every figure downstream is wrong too: your cash cover, your runway, the opening balance of your forecast.

It fails quietly, because a cash balance never looks implausible. Nobody reads £38,000 and thinks that cannot be right. Reconcile before you forecast, not after.

The twenty minute check

Once a month, before you read anything:

• Count the supplier bills dated in the month, against a normal month.
• Check the bank balance in your ledger against the bank's own figure.
• Confirm no deposit for undelivered work is sitting in income.
• Look for any cost account with no category.
• Make sure every ratio takes both of its numbers from the same place.

None of it needs an accountant, and all of it stops a perfectly balanced set of books quietly telling you the wrong thing.

Related reading

• how to read a profit and loss statement
• gross margin
• balance sheet
• debtor days
• management accounts software