Keeping your business going is an everyday job mostly – there are things you’ve got to do to keep it all running smoothly and to ensure you’ve got your customers happy, you’ve got your invoices paid and last, but not least have your accounting in order. If you don’t have this last thing, you can kiss your business goodbye pretty soon, trust me. I’d say it’s like the basic foundation you start building on a good and sustained business. Why so?

Think of it as having your body running on healthy food. It builds strong base inside, but also shows it outside. It’s similar in business – keeping order, having discipline and understanding the importance of accounting is what makes sure you can keep your customers happy (FYI, you get a lot more time to make sure they are so when you follow our simple steps to make sure your accounting is properly set). Putting effort into accounting also ensures your suppliers are well treated, i.e. you pay invoices on time; don’t get into their “bad client” list etc. And most importantly, good accounting gives you an overview of where you are with your business – are you making profits, have you got enough resources to fulfil orders, to pay up debt and so on.

However, as with keeping your own body healthy, there are things you’re expected to do with accounting just as well. There are things that don’t exactly result in accounting entries per say, but are done just as well. Most important I’d say is keeping in mind that they are to be done regularly and making yourself a habit of doing them rather than forgetting and them remembering and guess what, realizing you’re in a mess all of a sudden. How does it happen? When you forget to:

• Do regular stock counts.
• Do count your fixed assets.
• Do confirm balances with third parties – your customers and suppliers.
• Do reconcile your bank balances with bank statements.
• Do accrue expenses regularly.
• Do store your source documents.
• Do keep your internal accounting rules up-to-date.

Obviously you’re expected to do your accounting entries regularly, but as you can see, there’s a bit more to it. The actions listed (note that it’s not all obviously, but just the most common ones) are also something often called “control procedures” – something you do to ensure everything is accurate and correct in your accounts. Accounting is not just blind entries – real physical world and other parties reflect on what you have going on – your assets, your liabilities. It’s all confirmable and reconcilable and my recommendation is to do it as often as reasonable and practicable, but at least once a year.