Should you move invoices to improve the results?

“We are sooo close,” you say to your CFO in despair. “Another $300.000 to the bottom line, and we would have met expectations. Instead, we will lose credibility with the board and the bank. I hate it.”

Your CFO, who knows the numbers better than you, clears her throat. “Relax, there are things we can do. We only need to do these 2 maneuvers to meet our budget.” You raise your eyebrows with a slight relief. “What?”

“You know the consulting invoice we received for $150.000. I can call them and ask them to invoice us in January with a text that makes it look like it is for 2024. They want our business so badly that they will accept. Then, we plan to invoice $350.000 in the middle of January to our 2 retail customers. I´m certain we can move these to the end of this year with a 60-day credit instead of 30. With the profit from these transactions, we get a result of $300.000.” Your CFO looks proud.

You consider it for a few seconds before saying, “Can this be legal?” Your CFO nods. “Companies do it all the time.”

You are the CEO – what would you do?

Expert 1: Do not move the invoices

While moving invoices may be legal, it can be considered unethical. Manipulating financial records to meet targets erodes trust with stakeholders such as investors, the board, and banks. Transparency is vital for long-term relationships, and once trust is broken, it can be hard to rebuild. Although this tactic may solve immediate concerns, it creates a precedent that future financial success may rely on similar strategies, leading to a "house of cards" situation. This short-term fix could cause more significant long-term damage, such as reputational harm or regulatory scrutiny. Rather than focusing on quick fixes, the company should aim to build sustainable growth through better forecasting and cash flow management to avoid such dilemmas in the future.

Expert 2: I live in the real world – move the invoices

The CFO has confirmed that this maneuver is legal. While ethical concerns may arise, legality ensures that the company remains compliant with regulations. Many companies use similar practices to manage financial performance, especially in high-stakes situations. By moving the invoices, the company preserves its reputation and maintains its financial relationships. The loss of credibility could have significant long-term impacts, such as reduced access to capital or increased scrutiny from stakeholders. In conclusion, while this move may be unconventional, it ensures the company meets its immediate financial goals, maintains credibility, and buys time to execute longer-term strategies.

My opinion: I have moved invoices. Never cost invoices, but on a few occasions moved invoicing back or forth, either for our benefits or our customers. Sometimes customers want an invoice in December, instead of January, and I have never denied customers that. I would however, never put a text that is untrue on an invoice, and I would always talk with our accounting to get their OK on it. In this case I would not call a supplier and ask them to lie on an invoice.