Year-End Financial Red Flags: What Businesses Often Miss and How to Fix It

As year-end approaches, ensuring accurate operational and financial reporting is crucial. Even minor oversights can cause significant ripple effects--disrupting cash flow, efficiency, compliance and ultimately weakening overall performance and stakeholder confidence.

Below we share some of the most common red flags and overlooked items that can slow or complicate the year-end close process, along with tips to address them before they become bigger issues.

Red Flags in Receivables at Year-End

• Concentration of Receivables:

  
  

  When a large portion of outstanding accounts receivable is tied to only a few customers, the company’s liquidity becomes overly dependent on their payment behavior. Monitoring customer concentration helps minimize the risk of cash flow disruptions if a key customer delays or defaults.

• Aging Receivables:

  
  

  As receivables age, the likelihood of collection drops. Reviewing the aging schedule regularly helps prioritize collection efforts and flag potential concerns before they turn into write-offs.

• Bad Debt Risk:

  
  

  Unpaid invoices that require write-off reduce profitability and strain cash flow. Regular reviews and timely allowance adjusting help ensure accuracy and prevent unwanted surprises.

Beyond receivables, other areas of the year-end close process often go unnoticed. Reviewing these items carefully helps maintain accuracy and strengthens audit readiness.

Commonly Missed Items in Year-End Closing

• Accruals for Un-invoiced Services:

  
  

  Expenses incurred by year-end must be recorded—even if the vendor invoice hasn't arrived. Reviewing open purchase orders, subcontractor work, and service agreements can help identify missing accruals.

• Deferred Revenue Review:

  
  

  Customer billing should align with contract terms, so revenue is recognized exactly when earned. Reviewing deferred revenue accounts helps prevent premature recognition and improves reporting accuracy.

• Allowance for Doubtful Accounts:

  
  

  Reassessing the adequacy of the allowance based on current aging ensures the financial statements reflect true collectability.

• Inventory Adjustments for Obsolescence:

  
  

  Inventory—especially in environments involving materials, components, or spare parts—should be reviewed for slow-moving or obsolete items. Year-end adjustments support accurate valuation and better operational planning.

Even experienced internal teams can overlook critical details when year-end deadlines hit. Introducing structure and accountability into your close process can reduce risk and improve accuracy.

How to Spot and Prevent Oversights

• Establish a standardized, recurring year-end accounting and operational checklist.

• Reconcile all key balance sheet accounts prior to final close.

• Conduct periodic reviews of receivables, payables, fixed assets, and inventory balances.

• Involve cross-functional team members to identify operational discrepancies or inefficiencies early.

Navigating year-end financial and operational reporting requires diligence and attention to detail. MCDA CCG’s consulting, accounting, and operational optimization teams help businesses identify risks, streamline processes, strengthen internal controls, and ensure their

financials accurately reflect performance.

If you’re interested in support with year-end close, financial review, process improvement, or operational efficiency, please contact Riley Murr on our sales team for more information.