Poor Records equals Disaster

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.

For example, your cash balance may start to run low, the collection rate of your debtors may become poor, you may need to buy a new vehicle, you may have to explore whether you can afford to hire another employee for the office, you may run short of stock, your wages bill may start to grow week by week, you may start to wonder whether you are making a profit – there are many questions arising all the time that require answers.

The best way to keep on top of these situations is to refer back to your records.

If your recording system has been set up properly and they are easy to understand, it can be said that you have good records. If they are not, then it would take more time to extract information you require. This would result in extra cost and increased frustration. Keep your recordkeeping simple yet adequate.

© 2005 StartRunGrow

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