Do You Trust Your Numbers? How a CFO Closes Reporting Gaps
By Jerry Dreiling, CFO Partner
Trustworthy financial reporting allows leadership to understand performance, question assumptions, and act with confidence. A CFO closes reporting gaps by verifying underlying data, establishing consistent definitions, and making financial information available when decisions need to be made.
For private equity portfolio companies, the stakes extend beyond the monthly close. CEOs, boards, and sponsors rely on the same information to assess liquidity, track investment objectives, and evaluate future transactions. When that information is incomplete or inconsistent, uncertainty affects decisions across the business.
What can make financial reporting unreliable?
Reporting gaps often develop gradually. A business adds locations, completes an acquisition, or introduces new systems while its reporting processes remain largely unchanged. Spreadsheets fill the gaps, adjustments accumulate, and knowledge of how the numbers fit together rests with a few individuals.
Accuracy is only one consideration. Reports can be correct but arrive too late to influence a decision. They can present consolidated results while obscuring problems within a business unit. They can use definitions that differ across departments or change between reporting periods.
Consider gross margin. If sales measures it before freight costs while finance includes those costs, both teams may believe their figures are correct. Yet leadership is left comparing different measures. Resolving that gap requires agreement on what the metric represents and consistent application of that definition.
How can reporting become more useful?
A reliable monthly close establishes the foundation, but useful reporting requires interpretation. Leadership needs to understand what changed, what caused the change, and whether a response is necessary.
A revenue increase, for example, may reflect higher volume, stronger pricing, an acquisition, or the timing of a large order. Each explanation has different implications for the forecast. Similarly, improving EBITDA does not necessarily mean cash generation is improving. Receivables, inventory, capital spending, and debt payments can create a different liquidity picture.
A CFO connects those relationships and distinguishes operating trends from timing effects. The objective is a consistent explanation that helps management decide where to focus attention.
What should private equity sponsors see each month?
Private equity sponsors need reporting that connects actual performance to the investment plan. Financial statements provide the starting point. Revenue and margin trends, EBITDA, cash flow, working capital, and relevant operating measures add context.
Where applicable, the package should address debt covenant performance and progress against value creation initiatives. Variances should include explanations grounded in evidence, along with management’s planned response.
Consistency makes comparisons meaningful. If a metric changes, the reason and effect should be clear. If information remains provisional, that limitation should be identified. Sponsor visibility depends on understanding both what the numbers show and how much confidence to place in them.
Why does reporting cleanup matter before a transaction?
Transaction readiness depends partly on the ability to substantiate historical results. Buyers and lenders will examine accounting practices, working capital trends, forecasts, and proposed EBITDA adjustments. Gaps that seem manageable during routine reporting can become significant when several parties begin asking detailed questions.
A CFO can prepare by maintaining supporting schedules, documenting adjustments, and resolving discrepancies before diligence begins. Early preparation gives the team time to investigate issues without the additional pressure of a transaction deadline.
The same discipline has value even when a sale is years away. Clear, reproducible records make budgeting, lender discussions, and board oversight more productive.
What determines whether improvements will last?
Reporting improvements last when ownership, review, and documentation become part of routine work. A corrected report offers limited value if the next reporting cycle recreates the same problem.
Whether a company relies on its existing CFO or outsourced CFO services, responsibilities must be explicit. Companies evaluating CFO firms for private equity-backed companies or fractional CFO firms should consider how knowledge will transfer to the internal team. Financial leadership services should establish practices that the organization can maintain.
Ultimately, confidence in the numbers comes from knowing how they were produced, what they mean, and where uncertainty remains. That understanding allows leaders to spend less time reconciling competing explanations and more time making informed decisions.
Jerry Dreiling is an operational Chief Financial Officer with more than 30 years of experience in manufacturing, technology, engineering services, software, and financial payment and cash management services. He has guided companies through growth, capital raises, an IPO, acquisitions, and operational change. Jerry’s expertise spans strategic planning, treasury, accounting, analytics, and enterprise systems. He has helped raise more than $700 million through debt and equity arrangements and worked with boards, investors, lenders, and executive teams to improve financial visibility and support expansion.
ABOUT SEATONHILL PARTNERS, LP
SeatonHill Partners, LP provides organizations’ financial leadership with a strategic and operational focus by placing elite CFO talent to challenge the business and contribute to operational decisions that achieve results. With our curated talent, our financial leaders guide small and medium-sized businesses through complex financial problems to mitigate risk and achieve organizational goals.
We are the fastest-growing CFO services firm in the nation, offering the power of combined thought leadership and the support of the country’s top financial talent to the benefit of all our clients. SeatonHill has offices in Atlanta, Austin/San Antonio, Birmingham, Boston, Cedar Rapids, Charlotte, Chicago, Dallas/Fort Worth, Denver, Houston, Los Angeles, Madison, Miami, Milwaukee, Minneapolis/St. Paul, Nashville, New York, Orlando, Philadelphia, Phoenix, Princeton, Raleigh, Savannah, Tallahassee, Tampa/Sarasota, Washington DC.
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