Just recently I had an opportunity to look into detail of an accounting system. Not software, but the actual system when it comes to managing paperworks, invoices, bank extracts etc. There was a system and I was assured I would be able to find everything I needed with one specific number. Needless to say I was happy imagining I would only need an hour for the job in hand. Continue reading
Balances such some “leftovers” on prepayment accounts for an example or some accruals may at a certain point remain as such that you don’t know what’s behind them no longer.
They’re remains of entries once made and usually relate to either rounding up or down or some currency differences for an example. Be the reasons what they are however, what you should do, is get rid of them at some point to have the accounts accurate. Continue reading
Say you’re making your accounting entries daily, once in a few days or more irregular and over a longer period of time. Regardless and even more so, the less often you make the entries; make sure you’ve got one thing always happening.
Always have an order in performing the entries, accounting for them. What I mean by “order” is the following: Continue reading
Guess what’s a very important ratio to follow in your everyday business? It’s not so much a ratio, but a number. It is equally important however and ensures you will not run out of funds to manage your business.
It’s your planned net cash flow. Obviously it should be positive, right? Well, if it is negative, there’s also the possibility it will turn black once you get a considerable receivable collected. Continue reading
Negative working capital is a mathematical result when comparing current assets with current liabilities and the latter exceeds the first in number. That is you’ve got more liabilities than you’ve got assets to cover those liabilities in the next coming 12 months.
When thinking about it, negative is never a good thing. At least that’s how you’d normally go about that. However, there are situations when negative working capital isn’t necessarily bad: Continue reading
Identifying fraud isn’t easy, people get clever, people have more and more playing room etc. For someone who doesn’t even think about fraud happening it’s considerably difficult to imagine schemes some might undertake to first off make fraud and then cover it up. Nonetheless there are some things you can do to identify fraud (or at least possibilities fraud taking place or places where potential fraud may occur (that is flaws in your processes): Continue reading
To some extent you can do that of course, but not 100%. Fraud takes place regardless what you think happens or doesn’t happen, but what you can do it, is ensure you’ve got essential controls in place to mitigate the risk. If you think about it, there are some very easy controls you may implement to avoid fraud happening on low levels of the company’s structure. Continue reading