As we are at the end of the year many people are looking back on the year with different outlooks. Perhaps you started your business this year or 2021 was your first full year of operations. In the process of looking back things like your first sale, your biggest sale and other memorable moments may have been lost somewhere in history. If you can relate to this you might be thinking about your record-keeping system and how you need to improve it. We’ve got 5 tips here that will help you to create a better record-keeping system in your business.
Accounting system
The first place you have to look at is your accounting system. If you don’t have one it may be a good idea to establish one. In many cases accounting system is used to mean the accounting software and while that certainly is part of it it is not all. Firstly even if you work manually you still have an accounting system. An accounting system is not the software that does the processes but the processes it does. So you need to understand that we are looking at the rationale behind the system. Does it make sense? Is there anything it’s leaving out? Also, be sure to check the document flow; is each process producing the documents required to keep track of what is happening from every perspective?
Evidence
It is also important, especially when working in team environments to make sure that all activities be recorded with evidence. This ties to the document flow issue from before. If you run an eCommerce business when a product is dispatched from the warehouse for delivery the customer or recipient is expected to sign for it. The signed receipt of the goods slip must be provided to the warehouse for the product that was taken and to sales to confirm the fulfilment of an order. Now you know why receipt books make copies in triplicate. Whether it is internal or external some standard of evidence must be imposed for transaction recording and verification.
Keep source documents
Another important tip for businesses to observe is the keeping of source documents. For every transaction or activity, it is important to maintain the original receipt, invoice or order, depending on where the activity originated from. You may need source documents later and it would be unfortunate not to have them. Take for example the VAT information on the receipt. Businesses are not required to initially register for VAT but in the course of a financial year, this may become necessary. Trying to remember how much VAT was paid on a transaction especially one with multiple items, some of which may be zero-rated or exempt is a more than difficult task. So make sure you have a system for keeping source documents.
Use the cloud
As the volume of activity increases in your business, you may end up with a lot of paper to keep and organise. Nothing a good filing system cannot take care of. But over time you may find it all a bit difficult to keep up with. In addition to this ink isn’t permanent on all types of receipts so you may go back to find that your receipts and invoices are blank pieces of paper. This is frustrating if not a total inconvenience but there’s a solution for that. You need to get in the habit of using cloud storage for your receipts and other important documents. With a simple mobile phone, you can capture pictures of your receipts and upload them to a cloud service. And once they are up there they are up there forever. Depending on activity level you can do this daily, weekly or fortnightly.
Review records regularly
Finally, it is important to regularly review your records. In most cases what you will be checking for is the completeness of the records. You can use a random sampling technique to make sure everything is in check. If you are persuaded by the cloud storage idea then you can use the review to consolidate your records. You will appreciate that uploading multiple photos can take up quite a lot of space in your cloud storage. To consolidate these you can put these pictures in a word processing document (in date order would be great) then save it as a PDF document. Pdf documents are kinder on storage space. If you can consolidate these records every month creating separate documents for income, direct expenses, operating expenses and other items you will have a complete, concise record in the cloud that does not gobble up storage space.
The key takeaway here is that record-keeping is central to how well you know what is going on in your business. A competent record-keeping system makes this possible.
