Recordkeeping basics for SMEs

HOW do you tell if your business is making a profit or a loss if you are not keeping any records? Clive Mphambela Most of our small busin...

HOW do you tell if your business is making a profit or a loss if you are not keeping any records?

Clive Mphambela
Most of our small business owners unfortunately perhaps take recordkeeping for granted, but it can make the difference between success and failure in business.

Small to medium enterprises (SMEs) business owners need to develop the discipline of keeping track of all the sales, cash proceeds and overall turnover of their business as well as other vital business records such as bank account statements and so on.

One of the many reasons why most small businesses sometimes collapse is because the owners fail to keep these basic business records.

The most common reason why small businesses do not keep records is usually the belief that it is expensive or very complicated to do so. Maybe, but this may not be so actually.

While additional diligence and effort by the proprietor or manager of a business is required, it certainly will not cost the SME enterprise a lot of money.

Recordkeeping basics for SMEs
Another myth is that recordkeeping requires specialised accounting skills. Not really!
Oftentimes, it requires just business common sense and the basic ability to read and write and of course the commitment of the business owner

We discuss today some of the basics that every small business owner must know about recordkeeping for small businesses: the methods, indicators and measures as well as some of the benefits of basic record keeping.

Benefits of good recordkeeping
There are numerous advantages to keeping proper records of transactions for your small business and here are some of them.

Preparation of financial statements
Basic financial records will help you prepare financial statements that will become invaluable when you want to approach potential financiers or funders for the growth of your business.
For example, credible financial records are required to support your business proposal when one approaches a bank to apply for a bank loan.

Business health check
Assessing the health of your business is near impossible without records. Keeping basic records will assist the business owner gain greater control of the financial aspects of the business.
It becomes easy, for example, to determine which activities are costing the business in terms of losses and which areas are profitable and require more effort and investment. Understanding your business cash flows, income and balance sheet items.

Basic records will help you to keep track of the cash flows of your SME business. Cash is king and understanding which activities are generating cash within your business is key for the business owner, who can then adjust his efforts towards the cash positive activities.

This information is extremely important to your bankers and other providers of finance as they are also keenly looking at understanding your business cash-flows so that they can determine the nature and of the sources of funds for repayment of any loans they may consider granting to your business.
Assessing whether a business has a sound asset base is also made possible if one keeps an inventory of the business assets.

Enabling good citizenry
Most small businesses avoid keeping records as a possible way of avoiding tax obligations. However, most small businesses end up losing the opportunity to benefits from tax rebates offered by the proper registration of your business for tax purposes.

This also robs many of our small businesses the ability to be recognised as responsible citizens who contribute to the fiscus, to national gross domestic product and employment in the country.

Establishing a sound financial track record
Your basic business records together with your bank statement tell your business story. From the day you started operations in earnest to today. After all, numbers tell a story.
Religiously operate a business bank account and where possible bank all receipts and record all payments against your bank account. Your bank statements will provide potential lenders, (including your bank) a useful record of how your business has been running and will prove crucial in providing an insight into how it will run in future.
Because recordkeeping is crucial to almost all aspects of your small business, what is the optimal way of keeping records? The following section discusses some tips for effective record keeping.

The role of your bank and your banker
Recordkeeping is crucial if you want to have a clear idea of your financial transactions. If you need help with record keeping, you should talk to your banker. Your bank should not be just a place where you deposit your money and get a loan in need. Most of the banks in Zimbabwe have units that offer small business advisory services and they will help you along.

Daily updates
Daily updates keep the business owner from being swamped under a mountain of paperwork at the end of the month or at the end of the financial year. It also avoids issues being buried and forgotten and the business owner having to rely entirely on memory to reconstruct events.

Update business records daily, even if it means recording in a diary or hard counter book for eventual transfer to a proper business record book.


Keep all receipts and invoices
Keep copies of all receipts and invoices issued by your business.
This helps you to keep track of who gave you which payment, how much it was and why and when. This also helps keep track of your businesses sales and creates a basic financial trail.
Also keep a record of expenses; all payments made. Make it a habit to ask for a receipt whenever you spend money on behalf of the business.

Keep all payment documents in a well annotated or labeled file preferably in date order.
If you own more than one small business, keep separate records for each.

Important business documents
In addition to your bank statements, which perhaps are the most important financial record as they provide a useful independent repository of your businesses financial data and history, cash register slips and any other documents that represent proof of your income should be kept safe.
You need to file certain documents in the proper places if you wish to maintain a proper record of your finances. Purchases, sales, payrolls, and receipts must be preserved safely in a filing system.

Keep a separate file or folder for these documents
Suppliers’ receipts document your buying and selling transactions. These receipts should also be filed separately.

Keep documents related to business expenses. Even small cash payments should be recorded, and you should always have a cash disbursement or petty cash payment voucher ready. Documents related to assets, both movable and immovable, should be preserved so that it makes accounting for these easy.
If your small business employs other people, you should keep records of employee compensation. This will assist you in the event of possible dispute with employees.

Clive Mphambela is a Banker. He writes in his capacity as Advocacy Officer for the Bankers’ Association of Zimbabwe (BAZ). BAZ expressly invites players in the MSME sector and all other stakeholders to give their valuable comments and feedback related to this article to him on clive@baz.org.zw or on numbers 04-744686, 0772 206 913


Disclaimer: The Content Or Opinions Expressed On This Web Site Are Not To Be Interpreted As Medical Advice. Please Consult With Your Doctor Or Medical Practitioner Before Utilizing Any Suggestions On This Web Site.

COMMENTS

Name

10 Years,1,1948 Arab–Israeli War,1,1948 Palestinian exodus,1,1984 Summer Olympics,1,1st Duke of Wellington,1,2007 NBA Playoffs,1,2009 French Open,1,2010 FIFA World Cup,1,2013 Presidents Cup,1,2016 Summer Olympics,1,2016 Zimbabwe protests,2,20th Century Fox,1,3rd Street,1,A Course in Miracles,1,A-ok,1,Abacus Data,1,Abby Wambach,1,ABC Studios,1,Abraham,1,Abuja,1,Academy Award,1,Access (economics),1,Ace Attorney,1,Acton Institute,1,Adam Baker,1,Adams Street (BMT Myrtle Avenue Line),1,Adrian Peterson,1,Advertising,2,Advertising Age,1,Affectional orientation,1,Affluence in the United States,1,Africa,5,Africa Cup of Nations,1,Aging of wine,1,Air Canada Centre,1,Airline,1,Al-Shabaab (militant group),1,Ali Williams,1,Alibaba,1,Alibaba Group,2,Aliko Dangote,8,All-America,1,Alternative for Germany,1,Alternative investment,1,AlterNet,1,Amancio Ortega,1,Amber Rudd,1,Amélie Mauresmo,1,American Dream,1,American Heart Association,1,American Library Association,1,American National Election Studies,1,Americas,1,Amorepacific Corporation,1,Analytical skill,1,Andrew Breitbart,1,Andy Bruce,1,Andy Dehnart,1,Andy Murray,1,Anglican Communion,1,Anglican Consultative Council,1,Angola,1,Angst,1,Animal husbandry,1,Anna Karolína Schmiedlová,1,Apollo Justice: Ace Attorney,1,App Store (iOS),1,Apple Inc.,5,Application programming interface,2,AQR Capital,1,Argentina,1,Ariana Grande,1,Arthur Wellesley,1,Artist,1,Arun Jaitley,1,Asian Americans,1,Asser,1,Assistant director,1,Associated Press,4,Association football,1,Association football culture,1,Aston Park Tennis Center,1,Athena,1,Atlanta,1,Atlassian,1,Australia,2,Australian Bureau of Statistics,1,Baby boomer,1,Bachelor of Arts,1,Balance sheet,1,Ballistic missile,1,Bangkok,1,Bank account,1,Bank of England,2,Banking,1,Banking in India,1,Barack Obama,4,BB cream,1,BBC,2,Beijing,1,Being Mary Jane,1,Benjamin Franklin,1,Bernard Arnault,1,Beverly Hills,1,Bill Gates,7,Bill of materials,1,Billboard (magazine),1,Billboard Hot 100,1,Billionares,11,Biographies,2,Birmingham,1,Black Entertainment Television,1,Blue Bottle Coffee,1,Board of directors,1,Breaking News,18,Brexit,1,British South Africa Company,1,Budgeting,6,Burnley F.C.,1,Business,7,Businesses,53,Calabasas,1,California,5,Cameroon,1,Cameroon News,1,Canada,1,Canadian National Railway,1,Capcom,1,Capital gains tax,1,Carrie Underwood,1,Celebrities,1,Certified Financial Planner,1,Chairman,1,Charlie Munger,1,Chelsea F.C.,1,China,2,Chinese language,1,Chris Bosh,1,Christmas,1,Cleveland,1,Cleveland Cavaliers,2,Cloudy Bay,1,Companies,5,Continental Resources,1,Contract,1,Craig Venter,1,Cricket South Africa,1,Cristiano Ronaldo,1,Cupertino,2,Customer relationship management,1,David Icke,1,Davido,2,Death by natural causes,1,Debt,1,DeMar DeRozan,1,Democratic Part,1,Dick Enthoven,2,Directorate General of Economic Enforcement,1,Donald Trump,4,Dude Perfect,1,Dustin Moskovitz,1,Dwyane Wade,1,Earnings,2,Earnings call,2,Eastern Conference (NBA),1,Ecolab,1,Economic inequality,1,Education,1,Ellen DeGeneres,1,Elon Musk,1,England,1,Entrepreneur,1,Entrepreneurs,3,Entrepreneurship,3,Equal Protection Clause,1,Establishment Clause,1,Evan Williams,1,Evangelicalism,1,Facebook,5,Falcon 9,1,FC Barcelona,1,Feature phone,1,Finances,4,Financial adviser,1,Financial planner,1,Financial statement,1,Finland,1,Folorunsho Alakija,1,Forbes,1,Foxconn,1,French Open,1,Garbiñe Muguruza,1,Gerald Celente,1,Global Positioning System,1,Golden State Warriors,1,Goodwill Shana,1,Government of India,1,Greatest Zimbabweans,4,Grey's Anatomy,1,Gross domestic product,1,Gucci Mane,1,Harare,3,Harold Hamm,1,Harvard Business Review,1,Harvard Business School,1,Harvard University,1,Health,1,Helena Blavatsky,1,Herman Chinery-Hesse,2,Hillary Clinton,3,History of the United States,1,Hong Kong,1,Hope Solo,1,How Tos,11,Human Potential Movement,1,Hwange National Park,1,India,1,Indian Premier League,1,Indiana,1,Initial public offering,1,Insurace,1,International Monetary Fund,1,Internet,1,Investment,1,IPhone,3,Jack Ma,8,Jeff Bezos,1,Jerry Robinson,1,Job Growth,1,Joint Chiefs of Staff,1,Kanye West,1,Kerry Washington,1,Kevin Durant,1,Killing of Cecil the lion,1,Kim Jong-un,1,Kim Kardashian,1,Kingfisher Airlines,1,Korean language,1,LeBron James,2,Leicester City F.C.,1,LinkedIn,2,Lionel Messi,1,Loan,1,London,1,Los Angeles,1,Louis Vuitton,1,LVMH,1,Make-up artist,1,Manchester,1,Manchester United,1,Manchester United F.C.,1,Mara Brock Akil,1,Maria Sharapova,1,Mark Zuckerberg,5,Massachusetts,1,Medium (TV series),1,Men In Business,43,Miami Heat,1,Michael Jackson,1,Michelle Obama,1,Microsoft,1,Microsoft Office 365,1,Microsoft Windows,1,Military parade,1,Millionaires,52,Minister of Finance (New Zealand),1,MiraCosta College,1,Mobile Web,1,Money,2,Monthly Active Users,1,Morgan Tsvangirai,1,Muhammad,1,Muhammad Ali,1,Muhammadu Buhari,1,Nashua River,1,National Basketball Association,2,Nativity scene,1,Net worth,1,New Corporation,1,New York Angela Merkel,1,New Zealand,1,News,37,Nigel Chanakira,1,Nigeria,1,Nokia,1,North Korea,1,Nuclear weapons testing,1,Oceanside,1,Oklahoma City Thunder,1,Olympic Games,1,Oprah Winfrey,1,Oprah Winfrey Network (U.S. TV channel),1,Paris,2,Patrick Awuah,2,Philip Chiyangwa,1,Politics,3,Pony Ma,1,Portugal national football team,1,Premier League,2,President of the United States,2,President Robert Mugabe,1,Priscilla Chan,1,Production company,1,Prophet Magaya,1,Prophet Uebert Angel,1,Publishing,1,Pyongyang,1,Real Madrid C.F.,1,Reality television,1,Reid Hoffman,1,Republican Party (United States),3,Retail and Wholesalers,1,Revenue,2,Richard Branson,2,Richest Person,5,Robert Kiyosaki,1,Robert Mugabe,1,Ronaldo,1,Rotary International,1,Roth IRA,1,Rubber duck,1,Russell Westbrook,1,Sacrifice Chirisa,1,Sales,2,Salesforce.com,1,Sam Neill,1,Sarah Huffman,1,Satya Nadella,1,Seoul,1,Serena Williams,1,Share (finance),1,Shingi Munyeza Articles,10,Shonda Rhimes,1,Simon Towns,1,Simpson Street,1,Slider,100,Small Business,3,SMEs,50,Social media,1,SoftBank,1,South Africa,1,South Bend,1,South Korea,1,SpaceX,1,Special drawing rights,1,Stanislas Wawrinka,1,Start Ups,3,Steve Ballmer,1,Steve Jobs,3,Steve Wozniak,1,Stockmarkets,1,Strive Masiyiwa Articles,21,Supreme Court of the United States,1,Taylor Swift,1,Tech Industry,1,Tencent Holdings,2,The Boston Globe,1,The Elkhart Truth,1,The Oprah Winfrey Show,1,Theresa May,1,Tips,60,Tokyo,1,Top Stories,9,Toronto,1,Toronto Raptors,1,Travis Scott,1,Twitter,3,United Kingdom,2,United States,8,United States Constitution,1,United States district court,1,United States Soccer Federation,1,Vending machine,1,Venice,1,Vice President of the United States,1,Wall Street,2,Warren Buffett,1,Wealth,3,Wealth management,2,Wealthy Women,20,Wet Reckless,1,Wither Hills Vineyards,1,Women In Business,31,Zane Lowe,1,Zimbabwe,6,Zinedine Zidane,1,
ltr
item
African Millionaires: Recordkeeping basics for SMEs
Recordkeeping basics for SMEs
http://1.bp.blogspot.com/-bqPM4h7M8dA/U1oDwlmGEyI/AAAAAAAAGqw/ebt7CNYThBY/s1600/bbb.jpg
http://1.bp.blogspot.com/-bqPM4h7M8dA/U1oDwlmGEyI/AAAAAAAAGqw/ebt7CNYThBY/s72-c/bbb.jpg
African Millionaires
http://africanmillionares.realinfozones.com/2014/04/recordkeeping-basics-for-smes.html
http://africanmillionares.realinfozones.com/
http://africanmillionares.realinfozones.com/
http://africanmillionares.realinfozones.com/2014/04/recordkeeping-basics-for-smes.html
true
3084929495899154524
UTF-8
Loaded All Posts Not found any posts VIEW ALL Readmore Reply Cancel reply Delete By Home PAGES POSTS View All RECOMMENDED FOR YOU LABEL ARCHIVE SEARCH ALL POSTS Not found any post match with your request Back Home Sunday Monday Tuesday Wednesday Thursday Friday Saturday Sun Mon Tue Wed Thu Fri Sat January February March April May June July August September October November December Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec just now 1 minute ago $$1$$ minutes ago 1 hour ago $$1$$ hours ago Yesterday $$1$$ days ago $$1$$ weeks ago more than 5 weeks ago Followers Follow THIS CONTENT IS PREMIUM Please share to unlock Copy All Code Select All Code All codes were copied to your clipboard Can not copy the codes / texts, please press [CTRL]+[C] (or CMD+C with Mac) to copy