It is amazing how some business owners filter or throw away big hard earned money in their enterprise operation. Do you know that the least thing you think about in your business operation is proper accounting records? All you bother yourself with is selling, selling, selling and generating more income. Selling more and increasing revenues is only half the
profit battle, the other half is managing and spending your money more wisely. You can achieve the second half, only by having proper accounting records. The reasons why business owners pay little attention to proper accounting records, ranges from smallness of operation, high cost of hiring accountants, think proper accounting records as unimportant and not wanting to bother themselves. However, they have forgotten. If your operation is small. You are definitely looking for growth. And proper accounting records is one of the accelerators of growth. If you are talking about the cost. You will see later that you, are losing so much money than you think you are saving. If yours is because you don’t know. I’m sure by the end of this article you will understand. If yours is because you don’t want to be bothered. You are not in business yet.
PROPER ACCOUNTING RECORD – SOURCE OF GOOD INFORMATION TO RUN A BUSINESS Information in business means profit. The essence of accounting is to produce useful information that tells specific things about the company. To those who understand what accounting does ( you will be part of them by the end this article); it is like money in the bank. Information that you need to run your company is made available at your fingertips. Of course, this information is provided in financial terms, which is the language your accounting systems uses and also the language of business.
Here is an example. Chuks enterprises fabricates chairs and tables. It always seemed that there wasn’t enough money in the bank to pay its expenses. A quick look at the age of debtors revealed that customer paid on average two weeks after the time stated in the terms of sales. Rather than seek for loan or overdraft facilities. Chuks enterprises solution was to mount an aggressive collection campaign. The company used its accounts receivables system to monitor progress towards getting and keeping customers current. Within the space of two months Chuks enterprises bank account had risen to a point where it could pay its expenses regularly without having to obtain a loan.
Knowing what to look for………….. was the language the accounting system used to describe this problem. Foreign? No was the solution a great mystery? Again, No. However, it could be a mystery to those who do not keep good accounting records. For Chuks Enterprises, the answer was simply to collect debtors faster.
The accounting system identified the delinquent customers. All management needed was an understanding of the information available in the accounting system to help run the company. That is why you need a proper accounting system to record and maintain your business transactions.
What you want from your accounting system ……………………….. The kind of information we found in the prior examples is what you want from your accounting system. This feedback must
• Be accurate
• Fulfil management’s requirement
• Be easy to use.
We can employ information like this in solving problems and running the business. As well as having the attributes of accuracy, relevancy and simplicity. Your accounting system ought to be set up in such a way that it does not require an inordinate amount of time to maintain.