Set up a basic record-keeping system
Record-keeping best practice
To keep good control of your financial record-keeping, get into these good habits.
Hints and tips for record-keeping
|
What you need to do |
When |
|
Record sales in the sales ledger |
daily or at least weekly |
|
Record payments received in the sales ledger |
daily or at least weekly |
|
Record purchases in the purchase ledger |
daily or at least weekly |
|
Record payments made in the purchase ledger |
daily or at least weekly |
|
Reconcile the sales and purchase ledgers |
every month |
|
Chase all outstanding payments |
as soon as they are overdue |
|
Check your cash book against your bank statements and your sales and purchase ledgers against your cash book |
every time you receive a bank statement |
4 S's of record-keeping
1. System - spend time setting up a system which you stick to. Allocate a regular time every week/month to deal with your financial administration, or make it a key task for a trusted employee. File your records logically - put receipts in date-marked envelopes or folders and file bank statements in order.
2. Separate - one of the biggest mistakes business owners make is to mix their personal and professional finances. It is best to treat the business as a separate person, from which you only take income in the form of wages, dividends and in claiming back business expenses against receipts. So keep it separate - and simple.
3. Security - the fewer people involved in your record-keeping, the fewer the errors that are likely to creep in. Make it very clear whose responsibility it is to maintain records. It is a good idea to password-protect your computer records, and only divulge the password to a small number of people.
4. Safe storage - even if you choose to keep all your records on a computer, it is vital that you keep a regular (weekly, if not nightly) electronic back-up, and a paper copy elsewhere. Store records that cannot be copied, such as chequebook stubs and paying-in books, in a fireproof box.