When it comes to record-keeping, most small business owners start with good intent. They may introduce some procedures or set aside a certain amount of time each week so that they can bring everything up to date and continue to grow. Yet these may only be aspirations, and for one reason or another, they may easily fall behind. What are the consequences, and how can you avoid this type of situation altogether?

Paper Trail

While some businesses are simpler than others, each organisation needs to rely on a paper trail to some extent. Money needs to be spent to market or promote the company, and this will involve bills and receipts. Customers may require a proposal, and this will generate some additional paperwork. When work is confirmed, this may involve purchase orders and invoices, and you need to enter all this information into central ledgers.

Certainly, paperwork may be an old-fashioned term these days, and a lot of this documentation may be electronic, but nevertheless, it has to be organised and cross-referenced at various stages of the operation.

Growing Pains

When a company is small, this may not be too difficult to do. However, as it grows and takes on new customers or has to deal with a raft of new suppliers, things can rapidly get out of hand. There may be a tendency to "wing it" and to skip certain items of documentation to rush through a body of work. The owner or manager may make a mental note of this at the time, but they may forget the salient details as the weeks turn into months.

Crunch Time

Suddenly, deadlines approach, or it may be "tax time." There might be a mad rush to reconcile a lot of the documentation, to show that the accounts are valid and that they match any bank statement. With so many items of paperwork missing or so many complete records, this can be a near-impossible task. Far from an inconvenience, this could be a serious issue, especially if any accounts are misstated or tax may be underpaid.

The Better Approach

It's very important, therefore, to make sure that policies and procedures are designed carefully for your organisation and, when you implement them, you always adhere. Of course, you cannot invent additional hours in any day, and you may be extremely busy as it is, so you may have to employ the services of a bookkeeper to help. They are very experienced in this area, know all about procedures and techniques, and will ensure that everything is in good shape when it is time to reconcile.