Accounting & Systems

What are Recordkeeping Systems
One of the main reasons for the failure of a small business is due to poor record keeping. If you don’t keep accurate and up-to-date records of the financial transactions of your business you will not only be breaking the law by not complying with regulations required by the Tax Department, but you will also disadvantage yourself because you will fail to have an accurate picture of how your business is progressing.

Good records will allow you to monitor how your business is operating from day to day, and take any action necessary to correct problems that become obvious.

Professional Help to Set up a Recording System
Try not to think of record keeping as simply a nuisance imposed by government regulations. Try to think of this task as an important tool that you can use to manage your business. Take time to put it all together. If you don’t have experience in this area, engage an accountant to help you set up a good record keeping system.

Your system needs to be based on standard accounting principles. Nevertheless make sure it is tailor made for your business. You may complain about it but if you are wise you will use it. Remember it is not required for the purpose of storing facts that the government can use but more important it is an invaluable information source that will help you increase the profits in your business and contribute to your growth.

Your System must have these 5 Qualities
Regardless of the system that you finally develop, it is important for you to ensure that your record keeping system is:

  • Accurate – Make sure that the data collected is accurate.
  • Simple – Keep it as simple as possible so everyone can follow it.
  • Quick – It should enable you to obtain the information you require quickly if necessary.
  • Organised – Make sure it is clearly defined so it is easy to answer the questions of who, what, when, why and where.
  • Clear Trail – Make sure your system allows for a clear trail of transactions from the source documents right throughout the rest of your accounting system to final reports.

Always remember that the best recording system will be the simplest. It is the one that allows you to extract the information you need quickly and easily if you ever need it in a hurry.

Good Records – it’s a Must for Every Business Whatever the Size
Good records are a must. If you don’t keep them and use them, you will never know where your business has been, where it is going and what has been achieved for any particular period. The records must be accurate and up-to-date otherwise they will be of little use. They must be so easy to use that any employee, authorised in that area, would be able to understand them.

It should be clear and accurate enough for your accountant to use for preparing your financial statements and other reports. Keeping records is not enough – you must keep good records. During the operation of your business many things would be happening on a daily basis.

What does an Accounting System Provide?
Every business needs to have an accounting system so that at any time it is able to extract information that will highlight how the business is doing.
A good accounting system will provide the following information:

"Keeping records is just not enough - you must keep good and accurate records..."

  • It will show what income is coming into the business
  • It will show what money is being paid out of the business
  • It will show how much cash is sitting in your bank account
  • It will show how much money is due into the business from debtors (those that you have made sales to on credit)
  • It will show how much money is due to creditors (those from whom you have purchased goods on credit)
  • It will show the amount of stock and its value sitting in your shelves, factory or stores
  • It will show the amount of money that is paid for wages and salaries of staff
  • It will show the assets that the business owns at any particular time
  • It will show the liabilities or debts that the business owes at any particular time
  • It will show which products are selling the best and which are slow moving
  • It will show what profit or loss the business is making at any time
  • It will also enable a valuation of the business to be carried out based on the results in the system

Every business needs to have some sort of system whether simple or complex and an accountant should be consulted to assist you in this area if you do not have the experience to put in place a system yourself.