Learn to Create a Business Record Keeping System That Works
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The CCRRA System:
Capture, Check, Review, Record, Act
There is are expressions like You are what you eat or Garbage in Garbage out. What the people tried to say is the what you use to create something will have its direct influence on the final product. It will be the same concerning the financial management of your business. You have the create a system that will give you the feedback and control of your finance. If you get garbage feedback about your finances, you will make garbage decisions and will be far from the success you are looking.
Decision making starts with learning the facts from your financial statement. Your bookkeeping should give you the correct information. You must know the exact amounts of each category in the chart of accounts and as close as a possible prediction of your future sales. Only with accurate information, you may make the right decisions.
Consider these five steps before you start creating your financial record registration system.
CAPTURE the Data
What is not there does not exist. Make it a habit from day one, capture everything on record, and it will become automatic.
Capture the financial activity is the most challenging action and the number one in importance in the record of the process. Keep track on every transaction, every amount you took in from sales or spent as expenses. Keep personal, and company expenditure separately registered, and make yourself a payback check that will be registered on the books.
In the beginning, worry only about gathering the data systematically, register the description of the items and the quantity. Using the information will come later. Be sure to note everything on the accounting system with its name, amount, and description and date.
CHECK to Confirm That the Information Is Complete and Accurate
Take your time every week or two to review all the data that was captured during this time, assuring that it is all ready to be posted into your records.
Review and make sure about the details on each purchase. It will not be enough to note that it was paper; you better add that is a ream of paper you bought for your printer.
Set up a specific time for a session with yourself reviewing the records. Make it close enough, so you will not forget what all those transactions were.
RECORD the Data to Save It
Input all the data into your financial information books so you will be able to use it when you need it. You can use a bookkeeper or do it yourself. Do not postpone it. You may need to make a decision using the updated data.
If you are small enough, you can use a spreadsheet, once you grew you can use accounting software. One way to use software and an accountant is to use software that can be managed online. Updating on a monthly base will be enough for you decision making.
Consolidate and REVIEW the Information
When you already have your monthly reports, you can create four kinds of reports: a balance sheet, an income statement, accounts receivable and accounts payable.
Include a comparison report that will accumulate the monthly report. Pay attention to any unusual amounts and look carefully to the sales and expenses balance.
Organized, consolidate and REVIEW the data
After that, you have a few months of collecting data; you can produce reports that accumulate the four categories, a balance sheet, an income statement, accounts receivable, and accounts payable.
Compare the same reports of the past months, paying particular attention to the movements of funds and balance of gain and loss.
ACT Using the Data and Results of Your Business. Based on What You Learned
“Act” Means taking a decision, it can be to buy or not to buy something or sell or not sell part of your stock. In other words, it may be said as making decisions.
Use the data to create alerts points that will advise you of a problem. For example, when account payable is growing in amount and time with customers, stop them the credit.
If you see a jump on the expanses of one category, look what is happening, is it increase of raw materials, check the orders report to see if it is as a result of bigger orders.
Be assertive in going after slow sales, check with your sales team what is going with sales, is it quality issues or marketing and advertising? Look at the budget for publicity is how you can spend more on advertising online, using social media or Google.
Account payable is your face toward your suppliers. Pay on time, and you will even more time. If you drag payments, you will get discounts and may lose your credit. If you are short on cash, pay what is more important, or pay part of it first.
If you have someone in your organization in charge of payables, you still have to keep an eye on the reports to make sure that your guy is not sleeping with the payments. You are the owner or the CEO. It is your responsibility to read the statements and act according to the reality that you can see through these reports.
Even if accounting and financial system are not familiar to you, you will find it easy to understand and run it with minimal efforts. The most challenging part is to get done the discipline in the collection of information. Reading, understanding, and making a decision is original thinking about business.
Keeping your eyes on your financial statements on a routine, making sure that it is captured, Checked, recorded, reviewed, and action was taken.
By keeping your financial situation captured and organized in a manner that lets you read and understand the reality of your business. You will gain a better opportunity to succeed with your business.
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Disclaimer: John Wolf and paystubmakr.com are making a total effort to offer accurate, competent, ethical HR management, employer, and workplace advice. We do not use the words of an attorney and the content on the site is not given as legal advice. The website has readers from all US states which all have different laws on these topics. The reader should look for legal advice before taking any action. The information presented on this website is offered as a general guide only and never as