If you own a business without keeping records, you need to start.
A lot of entrepreneurs think once they have good cash flow there is no need to keep proper records. Even if you run an NGO or a not for profit venture , you need to keep adequate records , measure your performance , ascertain if you are growing , know whether sales is dropping or increasing and structure the business.
Putting structure to a business and keeping proper records gives you an oversight on whether you are doing fine, making profit or whether you will soon have financial problems. Most companies go down not because they didn’t make enough sales but mostly because there are no records to show when things are going wrong such that remedial actions can be taken. You should also conduct regular stock taking to ascertain if there are pilferage and theft. You should have some weekly and monthly records showing your profit and loss , cash flow prior to the annual accounts.
At the least keep the following records;
- Cash book
- General Ledger
- Income Statement
- Statement of Assets and Liabilities
- Statement of Inflows and Outflows of cash
This applies to all businesses even if you are making billions. Figures don’t lie.