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

Correct stock management to save money and obtain more profits.

Basic bookkeeping for entrepreneurs.

How to limit stock losses from wasted, broken, and spoiled stocks.

Introduction

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

Nothing is more embarrassing or frustrating than getting caught in the trap of not being able to find important documents at crucial times.

For example; I once visited a company, which became my client, and during the conversation a manager mentioned a problem with one of their suppliers regarding pricing and a credit memo that was incorrectly approved. She insisted on showing me the story and began searching for the relevant documentation. Did you know that after half an hour you had located the supplier invoices and the monthly statement in two separate files, but still couldn’t get your hands on the credit note or the last payment advice? She blushed embarrassed.

I asked him if his previous accountant had suggested a suitable filing system, in which case he would have been able to get hold of the entire set of vendor documentation in ten seconds. TOLD ME THAT SHE HAD DESIGNED THIS FILE SYSTEM Herself AND ADMITTED IT WAS AN ABSOLUTE DISORDER.

Not to mention, I changed his filing system immediately after taking over his accounting. All vendor documentation should be filed together, sorted by vendor name only, and filed alphabetically. They had all supplier invoices in one file, all credit notes in another, all payments in another, all orders and merchandise notes received in another, and inquiries in another. More like a cobweb in my mind.

I suggest you keep a file system structured as follows:

A separate file, or a set of files, for:

– All company or company registration documents

– The minutes of the meetings

– Formal and annual financial statements

– All informal operational procedures and reports, as these are used for decision-making.

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

– Industry regulatory authority documentation

– Labor relations and documents related to the union

– Retirement fund registrations and monthly returns

– Records of medical aid and monthly returns

– Contracts

– Staff appointment letters

– Salaries and wages

– Suppliers / Creditors and their monthly reconciliations

– Clients / Debtors and their monthly reconciliations

– Legal matters and Labor Disciplinary Hearings

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

– Petty cash book and reconciliations

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

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

To read more in this regard, follow the information in the author’s biography.