Record keeping and basic bookkeeping

What to avoid when budgeting and making your money stretch using proper financial planning.

Correct stock management to save money and obtain more benefits.

Basic Accounting for Entrepreneurs.

How to limit stock losses from waste, breakage and spoilage of stock.

Introduction

Many businesses fail due to inadequate or non-existent filing and record-keeping systems. Another reason for failure is the failure to routinely track profitability, bank balances, and forecast cash flow versus actual cash flow.

Nothing is more embarrassing or frustrating than falling into the trap of not being able to find important documents at crucial moments.

For example; I once visited a company, which became my client, and during the discussion, the manager mentioned a problem with one of his suppliers related to pricing and a credit note that was passed incorrectly. She insisted on showing me the story and started looking for the relevant documentation. Do you know that after half an hour she had located the invoices and the monthly statement from the supplier in two separate files, but she still couldn’t get her hands on the credit memo or the last payment notice? She blushed in embarrassment.

I asked him if his previous accountant had suggested a suitable filing system, in which case he could have had the entire set of vendor documentation in his hands in ten seconds. SHE TOLD ME SHE HAD DESIGNED THIS FILING SYSTEM AND ADMITTED IT WAS AN ABSOLUTE MESS.

Not to mention, I changed your filing system immediately after taking over your bookkeeping. All vendor documentation should be filed together, sorted by vendor name only, and filed alphabetically. They had all vendor invoices in one file, all credit notes in another, all payments in another, all orders and Goods Received Notes in another, and inquiries in another. More like a spider web in my mind.

I suggest you keep a file system structured as follows:

A separate file, or set of files, for:

– All commercial or company registration documents.

– The minutes of the meetings.

– Formal and annual financial statements

– All management and informal operating reports, since these are used for decision-making.

– All Revenue Services registration documents and monthly/bi-monthly statements

– Documentation from the Industry Regulatory Authority

– Documents related to Labor Relations and Unions

– Registration of Retirement Funds and monthly declarations

– Medical Assistance records and monthly statements

– Contracts

– Staff appointment letters

– Salaries and wages

– Suppliers/Creditors and their monthly reconciliations

– Customers/debtors and their monthly reconciliations

– Legal Matters and Labor Disciplinary Hearings

– Bank statements and reconciliations, a separate one for each bank account

– Petty cash book and reconciliations.

– Any other separate groups that may exist in your business.

This archiving method will be at least a good structured start for keeping a company’s books and having access to all source documentation.

To read more along these lines, follow the information in the author’s bio.