Accounting is and always will be a critical part of your business, but it doesn’t have to be a nightmare. Like all things in your business
1. Keep your personal and business finances separate
Small business owners often struggle to keep their personal and business finances separate especially if they are just starting out.
If you are mixing your finances, you are heading towards disaster. It is important to open separate bank accounts for your business to have a clear picture of what your business’s financial status is.
2. Sorting and filing of receipts
Receipts comes in all shapes and sizes and keeping track of them all can become a tedious task. Also, their ink tends to fade over time.
To simplify this copy or scan your receipts onto a A4 size paper and sort it according to the dates.
It will also help your accountant if you make notes on the copy receipts about what type of expense it was since the descriptions on receipts are not always clear as to what it is that was purchased. Also indicate if this purchase was made with cash, card, EFT or on account so your accountant will know where to look for the payment thereof.
3. Accurate invoicing
Invoices are so much more than just telling your client or customer what they owe you for goods purchased or services rendered. It is a record of the terms of a transaction and it is critical that you enter information on it that is accurate and complete.
Adding, amending, cancelling or creating multiple versions of an invoice gets confusing for yourself and your accountant. If you realise that you have send an erroneous invoice out, rather than amending or cancelling the invoice, issue a credit note that is linked to that invoice and create an entirely new invoice.
Always ensure that your invoices and credit notes are issued in numerical order which will make it easy to identify any gaps.
4. Accounts receivable system
It is important to implement a system where you can keep track of your accounts receivables. All receipts should be allocated to a specific invoice to simplify the task of determining what invoices have been paid and what not. This will also help you if there are any queries from your client’s regarding their accounts.
Follow up regularly on any outstanding amounts.
5. Working with cash
If you are working with cash in your business, it is essential that you keep accurate records of every cent that comes in or goes out.
Implement a system where slips are filled out for any cash payments and receipts which should be signed and dated and a detail description of the reason for the payment or receipt must be indicated on the slip.
6. References on bank statements
References on your bank statement is a crucial part of helping you identify your cash movements.
Make it clear to your clients that when they are making payments to you that they should use a clear reference so that it is easy for you or your accountant to allocate the receipts to the correct account. The best way to reference is usually an account number or invoice number or both.
Same on your side for making payments. Use clear descriptions in your references so that you know exactly where to allocate the specific payment.
If you have an accountant who does the processing for you and the descriptions on the bank statement is not clear, make a note on the bank statement what the receipt or payment was for.
This will eliminate the chances for incorrect allocations of payments and receipts.
7. Review your accounting records regularly
Successful businesses have a clear understanding of their monetary picture and constantly plan and determine where they can improve or save.
It’s important you examine your finances on a regular basis and avoid organizing last minute which can lead to confusion and things being missed.
Credo Fidei Accounting Services can assist your business in keeping your accounting records organized and simplified so that you can concentrate on the operations of your business.
