I was pulling numbers out of QuickBooks for something I intended to put in front of other people. I ran the Sales by Customer summary, looked at the total at the bottom, and there it was.
I want to be precise about what happened, because the interesting part isn't that a number was wrong. It's that nothing about the report looked wrong. No error, no warning, no obviously silly figure. Just a total, in the place where totals go, sitting under a column of numbers that were each individually correct.
Why it happened
We use sub-customers. Most people who run jobs do — the customer is the homeowner, and underneath them sit the individual jobs. It's the standard way to set a construction file up, and it's the right way.
What it means is that a single customer can appear on a grouped report more than once: the parent row, then a row for each job underneath it, then a Total for… line that sums the jobs back up. Depending on the report and how it's grouped, the grand total at the bottom can sweep up all three.
So every dollar got counted as the parent, again as the job, and again in the subtotal. On our file that produced a number nearly three times reality. I checked afterwards — the same thing shows up on the A/R Aging summary. The A/P side was fine.
The report wasn't lying to me. It was answering a slightly different question than the one I thought I'd asked, and it had no way of telling me that.
What caught it
Not intuition. I looked at $10.9 million and my first thought was that it seemed high, and my second thought was that a good year is a good year. That's the honest version.
What caught it was running a second report. The Profit & Loss for the same period showed income nowhere near eleven million. Two documents produced by the same software from the same data disagreed by six and a half million dollars, and only one of them could be right.
Rebuilt from the parent rows alone, the total came to about $4.10M — and that reconciled to the P&L. That's the number.
What I'd have done with the wrong one
This is the part worth sitting with. I wasn't running that report for fun. Had I not checked, $10,983,368 would have gone into a document and been handed to people who make decisions based on documents.
Not as a lie. As a figure I believed, from a system I trusted, that I'd never been given a reason to question. And it would have been discovered eventually — by a lender, by a buyer's accountant, by anyone who ran their own P&L. At which point the problem is no longer an arithmetic error. It's a credibility event, and it contaminates every other number I've ever quoted.
Ten minutes, on your own books
How to find out whether yours does this
- Run your Sales by Customer summary for a closed twelve-month period. Write down the grand total.
- Run your Profit & Loss for the identical period. Write down total income.
- Set the same basis on both — cash or accrual. A mismatch here produces a smaller, different disagreement, and it's the most common reason people misdiagnose this one.
- Compare. A small gap is normal; the two reports treat some items differently. A gap that looks like a multiple — twice, three times — is the grouping.
- Rebuild it from the parent rows only, ignoring job rows and every Total for… line. If that reconciles to the P&L, you've found it.
The habit underneath it
The specific bug matters less than the habit it should install: before you compute anything against a number, confirm the number is what you think it is.
Every percentage you calculate inherits its denominator. Get the base wrong and every figure downstream is wrong by the same factor, all at once, quietly and in the same direction. A margin, an overhead ratio, a per-employee figure, a valuation multiple — all of them, all wrong, and every one still internally consistent with the others. Nothing looks broken.
It isn't only software. A dentist says "we did $3.8 million" and means production, which runs about thirty percent above what was collected. A property manager says "we do eight million" and means gross bookings, three quarters of which is somebody else's money. A restaurant owner quotes a combined figure across three locations, one of which is losing money. None of them is exaggerating. Each is quoting the number their industry quotes.
The discipline is boring and it takes ten minutes: reconcile any figure you're about to build on to a second, independent document. Not because you distrust your bookkeeper. Because reports answer the question they were built to answer, and it is not always the one you asked.
Why this note exists. I nearly published $10,983,368. What stopped it was running one more report — and that's the whole of the method, applied to my own file rather than somebody else's.
Forgewright runs eight of these checks across a business in two weeks, prices what it finds, and traces every figure back to a document you handed over. Every price is published and there's a sample of the full deliverable on the site. If the arithmetic comes back small, your business is running well and you don't need us.