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Fara News, Ideas & Insights

Keeping Records As Business Owners

Monday July 26

Mama Jollof operates in the informal sector, selling cooked foods and doesn't keep records of her sales and expenses. Hence, we cannot measure her growth in terms of profitability and capacity to pay back her credit, using future cash flow projections.

Mama Jollof asked,

I have been running my business since forever, I was even born into this business, why do I need to keep records again? The truth is what you don't record, you can't measure and what you can't measure, you definitely cannot grow. Check most successful SMEs, there are structures in place that allows the owner keep record of their cash flow, inventory and even manage debts from their creditors.

Starting a business or running it effectively can be an overwhelming process in this economic environment. You will agree with me that small business operation is difficult without proper records and documentation of all business transactions. Do you know millions of micro and small business owners are struggling with basic bookkeeping and having structured financial statements despite having a good business case with great products and services. Consequently, it is important to state that business records are significant to the sustainability of any enterprise. Most small business owners forget that for business to be adequately successful, everything about the business Finance needs to be captured concretely and not just the business bank balance. Good business record-keeping lets you prepare financial statements of your company and it is one of the key ingredients of a good business that has a future. It helps you keep tabs on your expenses, and comes in handy if you ever need to seek a business loan from any creditor. You should keep documentary evidence that supports any item of Income, Deductions (expenses) and even credits.

If you operate in the real sector, some expenses might not have receipts but you must look for a way to record them, showing where and when the expense occurred and what it was for.Don't wait Further, You can start now by following these simple steps;

1. Remember to keep your receipts of purchases and expenses. If you are making any purchase for your business and you were not issued a receipt, request for one and file effectively.

2. If you are rendering any service to a client, ensure you issue a sales invoice.

3. If you are collecting money from a client, make sure you issue a receipt.

4. If you are so busy and don't have time to sort records, you can delegate to an employee.

5. If you don't know how to do any of these, you can learn depending on the level you are, but also consider outsourcing to experts.

Conclusively, In view of the challenges of keeping documents it is advised that you go paperless, store everything electronically, and always make backups. With this system the records can be kept for many years, indeed through the life of the business. one thing you can do is create a google drive account and store your details in the cloud. If you don't make record keeping a habit, you might be limiting the growth capability of your business. Make a decision today and see how your business health changes. Another value we are bringing to you, is to enable savings on our platform. Savings on FARA is as simple as ABC. Visit any verified Partner around you to start now.