The Lesson of $1.82 (November 2015)

Is it worth the time to look for a $1.82?   Recently, I was working with a client on the integration between a new payroll system and the general ledger. It was somewhat complex to say the least. We were dealing with a data matrix that was about 1,300 rows by 40 columns and included half a dozen different legal entities and ultimately resulted in an 850 row journal entry across multiple locations. We were also lacking certain information we wish that we had and were dealing with a less than intuitive GL structure that we had inherited. Oh, and we were well behind schedule – six business days beyond month end (and counting) with an impatient CEO (great but impatient).  Patience isn’t my strong suit either.

The integration we developed for the first payroll run worked, but there was something wrong with the next payroll run.  Clearly not all of the bugs were shaken out of the system yet.  When I asked how it was going, I was told we were out of balance by $1.82.

I spend most of my time on strategic issues and helping CEO’s drive the business so usually, I wouldn’t dive into an issue this small.  My rule of thumb is that I want to achieve a 10:1 payback on incremental time invested in a given project.  With $1.82 at stake, that clearly wasn’t going to happen. On the other hand, something was wrong and I thought that perhaps I could find it in just a few minutes.  Certain things should tie to the penny.  Sometimes, all it takes is a fresh set of eyes on the problem.  I checked the most likely causes.  Did we drop a column of data, inadvertently delete some data, flip a sign?  Nothing.  I started to systematically check items that should tie to other reports but soon needed to put the matter aside to attend to other issues.

I was struggling with our $1.82 problem. On one hand, the amount was too small to justify spending any real time on it.  On the other hand, my gut and logic told me that there had to be more to the story.

As I announced that we should just charge off the $1.82. I immediately followed up with, “but let me check one more thing”.  Something had occurred to me and I found $1.09. That meant I was dealing with not one error, but at least two.

The controller and I started to discuss another issue and I mentioned that we still weren’t tied off. I told her where we stood and she asked a question about the tax side of the equation. The entire conversation took less than a minute.  We found another problem.  Again, a fresh perspective usually helps.

I kept working other issues but eventually called the staff accountant into the room and told him about the tax problem and asked him to correct it. Now we were out of balance by $5,437.89. Immediately upon seeing that number, he said, “that looks familiar” and he told me about an item that was $4,837.89. That was clearly an offsetting item so now we were down to exactly $600.00.  There were two obvious suspects that immediately jumped off the page (or, rather, out of the spreadsheet) at both of us — a $600.00 item and a $300.00 item that appeared to have the wrong sign. It was clear that the $600.00 item was handled correctly but there was something strange about the $300.00 item.

Just then the controller walked by so we called her into the conference room where we were working.  We told her about the issue which we could tie back to an individual employee.  She said, “I’ll be right back”.  Within 2 minutes she came in and announced that there was a mistake in the payroll and that rather than a special $300.00 deduction the employee was paid an extra $300.00.  We had our $600.00.

So, what’s the lesson of $1.82? There are certainly times when something this small is simply not worth pursuing. On the other hand, there are times when a small problem is worth pursuing because it is a symptom of a larger issue.  In this instance, that turned out to be the case and time spent will allow us to move forward with programming that will make this process easier in the future and pay dividends down the road.   And while we didn’t achieve a 10:1 payback on the time invested, the $600.00 we found will at least cover the cost of the time we spent pursuing this issue.

As always, I appreciate the comments and feedback I get from the monthly edition of my Finance Matters newsletter.

If your business could benefit from fractional CFO services, I would welcome the chance to speak with you.  Please give me a call at (314) 863-6637 or send an email to [email protected]   The archive of these monthly newsletters is posted at the Resources section of

your cash is flowing.  know where.®     Ken Homza    Copyright @ 2015 Homza Consulting, Inc.


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