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The day to day paperwork involved in running a small business. Not an exhaustive list. [Thread]
Look professional. Try to get these books printed with your business logo and other details.
1) cash sale book.
A cash sale is a document that specifies goods sold, quantity, price, and total. It is also an acknowledgement of sale where cash/MPESA/credit card/current cheque is paid for immediate settlement. Cross reference with ETR number if applicable.
A cash sale is a document that specifies goods sold, quantity, price, and total. It is also an acknowledgement of sale where cash/MPESA/credit card/current cheque is paid for immediate settlement. Cross reference with ETR number if applicable.
2) invoice book.
Similar to cash sale, but this is for goods sold on credit. The customer will have to have an account with you for this to apply. Total every month and send a statement of account to your customer.
Similar to cash sale, but this is for goods sold on credit. The customer will have to have an account with you for this to apply. Total every month and send a statement of account to your customer.
3) Delivery note book.
This is important for acknowledgement of delivery of items, whether or not they are sold. For example documents, samples, equipment, etc. Watu wasiseme hawakureceive. The duplicate copy of an invoice serves the same purpose as a delivery note.
This is important for acknowledgement of delivery of items, whether or not they are sold. For example documents, samples, equipment, etc. Watu wasiseme hawakureceive. The duplicate copy of an invoice serves the same purpose as a delivery note.
3) cont'd... a delivery note is often appended with the words: Please receive the following in good order and condition. And a space for the recipient's details. Name, ID number, signature, and company rubber stamp.
4) Receipt book.
Not the same as a cash sale. A receipt is an acknowledgement of payment for goods and services supplied on credit via invoice.
An invoice debits a customer's account. A receipt credits a customer's account. It will appear on the monthly statement of account.
Not the same as a cash sale. A receipt is an acknowledgement of payment for goods and services supplied on credit via invoice.
An invoice debits a customer's account. A receipt credits a customer's account. It will appear on the monthly statement of account.
5) Petty cash voucher book:
A petty cash voucher is a document that documents disbursement of funds for small purchases or expenses where the use of cheques is not possible or not practical. The voucher specifies details of the recipient, items bought, total, and signature.
A petty cash voucher is a document that documents disbursement of funds for small purchases or expenses where the use of cheques is not possible or not practical. The voucher specifies details of the recipient, items bought, total, and signature.
6) Daily ledger/cash journal.
This is where those free diaries come in very handy.
Every day, specify total sales (cash and credit) and ensure it tallies with ETR totals.
Purchases and expenses as per cheques issued and petty cash vouchers.
Opening and closing cash balances.
This is where those free diaries come in very handy.
Every day, specify total sales (cash and credit) and ensure it tallies with ETR totals.
Purchases and expenses as per cheques issued and petty cash vouchers.
Opening and closing cash balances.
Benefits of a paper based system:
1) Ease of audit. Easy to spot missing invoice copies. Easy to see unpaid cash sales. That book copy is the original.
2) Highly portable. Carry your books around anywhere. Versatile. No need for power. Multi user access, yet easily to secure.
1) Ease of audit. Easy to spot missing invoice copies. Easy to see unpaid cash sales. That book copy is the original.
2) Highly portable. Carry your books around anywhere. Versatile. No need for power. Multi user access, yet easily to secure.
3) Cheap and easy to implement. Books and pens, maybe a stapler. Hakuna stress ingine.
Disadvantages of a paper based system:
1) not easily scalable. Especially as the number of transactions is large.
2) an electronic system does the tallying and reports automatically, which helps for large number of transactions.
3) easy to generate invoices and cash sales.
1) not easily scalable. Especially as the number of transactions is large.
2) an electronic system does the tallying and reports automatically, which helps for large number of transactions.
3) easy to generate invoices and cash sales.
4) electronic systems can be integrated with ETR.
5) electronic systems eliminate user errors, but only if they are properly set up. Garbage in garbage out applies.
5) electronic systems eliminate user errors, but only if they are properly set up. Garbage in garbage out applies.
Which to choose?
Electronic vs Manual system:
High number of transactions?
1-0.
Ease of reports?
1-0.
Ease of implementation/flexibility?
0-1.
Portability/multi-user?
0-1.
My opinion. I use a hybrid system. Sales is paper based. It is what works for me, for the time being.
Electronic vs Manual system:
High number of transactions?
1-0.
Ease of reports?
1-0.
Ease of implementation/flexibility?
0-1.
Portability/multi-user?
0-1.
My opinion. I use a hybrid system. Sales is paper based. It is what works for me, for the time being.
Think carefully. If you are currently using a manual system and it works for you, ask yourself if you really need to go electronic. Because that's a potential rabbit hole you'll have trouble getting out of.
I remember the words of my Inf Sys HoD Prof Sewry.
"Beware the cutting edge, it can swiftly become the bleeding edge."
"Beware the cutting edge, it can swiftly become the bleeding edge."
I forgot to add book number 6) The credit note book.
This reverses entries made via invoice. It takes into account returns, errors on invoices, goods not received. It credits the sales (accounts receivable) ledger.
This reverses entries made via invoice. It takes into account returns, errors on invoices, goods not received. It credits the sales (accounts receivable) ledger.
How many copies should each book have?
1) cash sale: two copies. One (original) for the customer. Book copy for the business and auditor.
1) cash sale: two copies. One (original) for the customer. Book copy for the business and auditor.
2) invoice: three copies. One (original) for the customer. Accompanied by another copy which the customer signs & stamps on receiving goods. Next copy goes to accounts for end of month statements. Book copy remains with the sales dept/audit.
3) credit note: as invoice copies above.
4) delivery note: three copies. One for the customer, accompanied by the copy acknowledging receipt of goods/documents/equipment, and one book copy for the company/audit.
5) Receipt book: two copies. One for the customer, and the book copy goes to accounts/audit.
6) Cash sale: two copies. One to customer, and book copy remains with sales dept/audit.
This is a very important point for audit. The top copy can be altered. The copy that remains in the book cannot be altered. The book copy is the bona fide reflection of the FACTS. This is why the book copies are audited first. The other copies can be used to crook the system.
Items added to the top copy of an invoice, credit note, cash sale, delivery note or receipt can easily be verified for authenticity using the book copy. Think about it. Dodgy client adds two extra zeros to a receipt and claims that payment was made. Check the book copy.
Further verification can of course be done via checking your bank statement or MPESA till statement, but the book copy is just easier to refer to. Ama namna gani my frens?
