| Keeping Good Records | | | | condition, businesses should constantly appraise |
| One of the ingredients of good accounting | | | | their financial status to ensure a good book |
| practices is keeping proper records. No matter | | | | balance. |
| how small or large a business, it is essential to | | | | Most medium to large organisations carry out a |
| have a filing/storage system in place to store all | | | | monthly, quarterly or regular form of |
| financial records. Financial records include receipts, | | | | management accounting exercise. These reports |
| invoices, bank tellers, cheque stubs, withdrawal | | | | are for internal use and it enables the business to |
| slips, bank statements etc. With the advent of | | | | identify its financial position on a consistent basis. |
| online banking, emails and other forms of online | | | | Though meant for internal purposes, it is an |
| communication, more businesses are storing their | | | | effective way to monitor performance and plan |
| accounting information in virtual form. More | | | | for the future. |
| invoices and receipts are now sent by emails to | | | | Legal Requirements |
| reduce carbon print, whilst more payments are | | | | Businesses must satisfy legal accounting |
| been carried out online than ever before. | | | | requirements whilst in operation. It is also |
| Despite the advancement in technology to aid | | | | important that they meet the need of the various |
| accounting communication, it is essential that all | | | | stakeholders in the company. These stakeholders |
| form of records is kept safely for easy access. | | | | have a legal requirement to certain financial |
| This is crucial for accurate financial reporting and | | | | information, which must be presented in an |
| business decision making. If a business stores | | | | acceptable format. |
| more information on IT systems than files, then a | | | | Accounts Statements must also be prepared and |
| back-up system is important for added security | | | | filed with the relevant Government bodies - in the |
| of data. Filing systems must be easily accessible | | | | UK these are HM Revenue & Customs, |
| preferable in chronological order. It might also be | | | | Companies House and the Charity Commission. |
| necessary to keep records of incoming | | | | They must be in the right format and submitted |
| paper-format financial information on a system as | | | | by the deadlines set by the authority concerned. |
| back-up. | | | | Failure to file accounts in the right format and at |
| For taxation purpose documents - paper or | | | | the right time may result in a financial penalty, |
| computer generated must be kept for a minimum | | | | except in extreme circumstances. |
| of five years after the end of the accounting | | | | It is therefore essential that an appropriate |
| period of the business. | | | | book-keeping system is in place to ensure |
| Accounting Systems | | | | information is captured accurately and efficiently. |
| Accounting services vary from business to | | | | It is also crucial that businesses have "best |
| business; some companies prefer to outsource | | | | practice" policies in place to ensure accounts |
| their accounting to an accounting firm or | | | | personnel complies with legal requirements. |
| freelancer accountant. Another option is to hire | | | | Account Personnel |
| staff to carry out all financial functions in-house | | | | Competent accounting personnel are as valuable |
| whilst some small business owners choose to | | | | as the information they provide. Most businesses |
| perform these accounting functions themselves. | | | | require the assistance of experienced accountants |
| The accounting system a business chooses must | | | | to collate and file their accounts. Medium to large |
| be able to meet the needs of the business. A | | | | companies generally recruit their own personnel to |
| small business might be better off hiring an | | | | look after their company accounting processes. |
| accountant, rather than invest in a system there | | | | With the credit crunch hitting businesses profit |
| will be no time to operate. A large organisation | | | | margin, a lot of businesses are outsourcing their |
| might be able to afford a good accounting | | | | accounting services to external firms. Some of |
| package, but the system will be of no use if | | | | the main advantages of outsourcing are the |
| there is no competent staff to operate it. For | | | | reduction in staff related costs and the wide |
| effective accounting, businesses must ensure | | | | range of expertise gained from reputable |
| they match their accounting needs with the | | | | accounting firms. |
| appropriate system including outsourcing options. | | | | Whatever product or service a business provides, |
| Monitor Information | | | | ethical accounting practices will ensure a business |
| A business account is like the flip chart at the end | | | | is able to identify its financial position and plan |
| of a patient's bed which shows the vital signs of | | | | according to ensure its survival and longevity. |
| that business. To keep the business vitals in good | | | | |