Firstly, wishing you all a Happy and Prosperous New Year!
My new year is starting off fabulously, so this bodes well to making my plans come to fruition J. Have you made plans for 2014?
You know how I always end of my newsletters with the words “keep it simple”? Well, that is my motto for the bookkeeping! As soon you find it becoming complicated, there is something you have not understood! Find what word being used is not understood, clarify it using a dictionary, and you’ll find that it becomes simple again!! Pure magic!!
An accounts department basically has three areas: Debtors, also called Accounts Receivable, which is where you create invoices and collect the money owed you by customers; Creditors, also called Accounts Payable, which is where your purchasing department is, and where you receive the supplier’s bills and pay them. This department also includes the payroll administration. Then there is the department of records, assets and materiel (equipment and materials of an organisation), this includes looking after all the assets of a company, and ensuring the correct recording and filing of all financial transactions of a company, such as the above invoices, bills, payroll, and all methods of money flows: bank accounts, petty cash, credit cards. And from those records, you can establish the financial position of the company at any given moment in time.
It is of crucial importance that all the paperwork is there and accounted for. If any are missing, this picture of the financial position of the company will be incomplete and therefore incorrect! In my case, I work for my customers off-site, meaning that I am not in the customer’s premises, and I am not part of the day-to-day running of the business. It is therefore very important that the paperwork speaks for itself and can be understood; I should be able to see a piece of paper of any given business, and know what that sale or purchase is all about! If not, it’s very helpful if notes are made on it to help me identify that paper.
Part of bookkeeping also is ensuring that all the paperwork cross references: that all money coming in is accounted for in the invoices, and that all money going out is accounted for in the bills and receipts. In this way you can establish a paper trail of any transaction. This is important to ensure the correctness of all the records and especially the Financial Reports of the business. Consider the manager using the Financial Reports to make important business decisions – if the reports are incorrect, then most likely the decisions will not be the best either!
Having correct data will enable the management to make correct decisions! This will help the survival potential of the business!
As always, keep it simple and… Flourish and Prosper 🙂
For courses available on these topics and from which I learnt the management technology I use in my business, please contact the Hubbard College of Administration at http://www.hubbardcollege.org