So, Autumn’s now here and we all instinctively buckle down into sleepy mode; heads down, get on with the work and don’t lift them up again until it’s time to finish for the day. This year, instead, why not take some time to have the equivalent of a “spring clean” on your business administrative tasks? It is a good time to do it now before the Christmas rush. Take stock of the state your business is in, implement any changes needed to run a slicker operation and then resolve to keep on top of things. Don’t let your business go into hibernation just because the long nights are drawing in.
The recent Tesco accounting reporting irregularities may have had us gasping and tutting at how corrupt those at the top of large organizations are. We sit back and shake our heads at their audacity in trying the stunt on and then smile smugly as they get caught out. How could this happen in a large company we wonder? Surely someone official must check the figures before they are released?
Check – don’t forget that word because it’s important, as any auditor will tell you. Whilst you’re wondering how Tesco could let this happen take a moment to think about your own business and whether it could also happen to you too.
Strong administrative and, most importantly, financial functions are vital to maintaining good health for your business. It’s no good racking up bumper sales if you’re spending is way off kilter. You still won’t survive if the underlying figures don’t add up. Vigorous administrative procedures give your business a strong foundation upon which to build your dream empire. The more regularly you keep things in order the better. Spend the last few minutes of each day recording transactions and filing the receipts and invoices.
It is a legal requirement that every business should keep proper financial records. These are records of all income and outgoings. These must be stored for six years. Her Majesty’s Revenue and Customs (HMRC) can ask to see evidence of the figures that you state on your tax return. So keep any paper documents that relate to your business transactions. If in doubt as to whether it’s needed then keep it. Better to be safe than sorry.
Records do not have to be paper based anymore. Electronic copies are perfectly acceptable. Do try to organize them in a logical order, however. You must be able to find a random invoice number or receipt by date so you must be confident of the systems you have in place and that you will be able to do this. If any of your documents are stored electronically then it is vital that they are backed up adequately. Daily is ideal but definitely weekly backups are a must. I would advise this even if your information is stored in a cloud retrieval system. You can never have too many copies of anything. Something will generally go wrong somewhere.
If you employ anyone or send some of your work out to an external agency to do (e.g. maintaining your payroll function) then you will need to add in checks at various stages of the procedures. Processes like signatures on documents and regular reconciliation of bank balances help to ensure that your business’s financial health is ticking over smoothly. When there is more than one person working with you then you it is wise to get two different people to sign and check different stages of the process. It’s harder to get two people to collude in fraud than it is for one acting on their own, who is possibly acting out of desperation.
You may think you’re small fry, working on your own, so don’t need to worry about any of these checks and balances. You’re not going to defraud yourself after all, are you? But what about those times when you’re tired, too busy and/or stressed out? Will you remember to do all those housekeeping jobs that your business needs to survive? What about accidental errors and slip-ups? Sometimes you need protecting against yourself. It’s not always about deliberate fraud.
So, regular upkeep of the mundane chores, along with checks that these have been done, will save you from possible future embarrassment. Look after your everyday records and they will look after you.