Are you stretched for time when it comes to closing your books and delivering year-end financial statements? Lenders and investors may think the worst if a company’s financial statements aren’t submitted in a timely manner. Here are three assumptions your stakeholders could make when your financial statements are late.

Something else -   Understandability

1. You’re hiding negative results

No one wants to be the bearer of bad news. Deferred financial reporting can lead investors and lenders to presume that the company’s performance has fallen below historical levels or what was forecast at the beginning of the year.

2. Your management team is inept, uninformed or both

Alternatively, stakeholders may assume that management is hopelessly disorganised and can’t pull together the requisite data to finish the financials. For example, late financials are common when a controller is inexperienced, the accounting department is understaffed or a major accounting rule change has gone into effect.

Delayed statements may also signal that management doesn’t consider financial reporting a priority. This lackadaisical mindset implies that no one is monitoring financial performance throughout the year.

3. You’re more likely to be a victim of occupational fraud

If financial statements aren’t timely or prioritised by the company’s owners, unscrupulous employees may see it as a golden opportunity to steal from the company. Fraud is more difficult to hide if you insist on timely financial statements and take the time to review them.

See also: Conceptual Framework 2018