The Right Way To Handle Your Business Accounts

 I want to dedicate this write-up to Alhaji Raheem A. Adejumo of blessed memory. He’s responsible for the insight that made it possible for me to have a good report to write on in this aspect of my entrepreneurial adventure today.
Alhaji Adejumo, whose generous offer of a storey building for two years without rent helped to plant the feet of our business firmly on the ground, had told me:
"Sunny, a business without records is not a business. Therefore, keep an accurate record of your business." I took this lesson to heart. Today, I thank God that he gave me the hint at the time he did. And, better still, I'm grateful to God that I took the lesson to heart. Otherwise, I would've been out of business today. That is the blunt truth!
What records are we talking about here? The accounting records. The careful and painstaking recording of all sources where money is flowing into your business and a corresponding record of how they are flowing out, not leaving out a single detail, no matter how small.
Later on, as I got more mature running our business, I realized that accurate record keeping is a lifesaver.
The best way to go about this important task is to buy the idea, as I did, from day one. That means you cannot do business without having at least a book keeper to record your day-to-day financial activities; also, you cannot stroll into your company’s account department and take money anyhow, without recording what the money’s meant for.
The biggest mistake I've noticed that most people make about keeping records of their financial activities is that people want to rely on their memory for the processing of this vital information. I agree, your memory is powerful. It's a million times better than that of a computer.
But the problem is that it can only deal effectively with one subject at a time. Which means that if you're interrupted by something else, it will set aside what it was working on and concentrate on the new thing.
You may later say you want to return to the subject of mentally keeping your business’s records, but the question would be: Where did I stop? Without that information written on a paper where you can retrieve it, it may be lost, never to be found again.
To get on top of this record keeping game, you need the services of accountants. These wonderful people are trained to keep your records for you and they do a very good job of it; especially the honest and competent ones among them.
Hint: Never make the mistake of hiring an accountant who is not competent. As for being honest, you have to rely on God to choose an honest one for you. You'll never know who is honest by merely looking at their faces or at the fanciful or low-profile way they're dressed.
If there's one thing I've learnt, in addition to Alhaji Adejumo's all-time lesson, it is that you must check, double-check and cross-check and double, double-check your financial records. If you fail to do this, you will have cause to weep in the middle of the night.
Here's a story someone told me, which illustrates why you must heed my words of caution on this subject: This aged business owner, according to the story, had everything going his way in his business. The demand for his product was steady in the marketplace. And his customers were loyal.
Then it happened. His receivables started piling up.
And his accounts people were able to explain it away. Their long-time customers were facing a hard-time in their business so they were finding it difficult paying consistently as they used to do in the past.
Because they had a reserve of money, they kept on producing and supplying to their customers. Then they too reached a point where they had to be relying on suppliers' credit to keep their operation going.
When the situation persisted, the owner took the names of some customers to go and talk to them and find out exactly why they were finding it difficult to pay their bills. When he went to the first customer and told him his mission, the managing director said he was not aware they were owing him any money, not to talk of their indebtedness being as high as he had claimed.
The MD called his accountant and asked him to come with the current status of their account with this other business. When the accountant brought the record books, which showed that all the monies the business owner was claiming was owed his company had been paid, with the last payment of N1.5m made just about a week earlier, the man almost fainted.
He apologized to the customer and quickly went round to the other companies and got the same feedback. By the time he got back to his office, more than N80m had found its way out of his business!
Although he was able to get the police to round up his accountants for questioning and possible prosecution, those in business know that it's better to be in control of your money than trying to get the police to recover them from wherever it’s been stashed away.
This business owner went down with stroke, got flown abroad, and is still receiving treatment as at press time.
How do you avoid this sort of disaster from happening to you? Simple: Stay on top of your business’s finances. Agreed, it is true that you cannot see everything that is going on in your accounts department. But that is not when you're a small or medium-sized business.
Unless you have another duty (and you'll have to persuade me that that duty is more important than following, on a minute-by-minute basis, how money is flowing into and out of your business), then you MUST sit on top of your business’s cash flow.
Make sure that there is an accounting system in place and that you, as the business owner or the managing director, know how the system operates. You must know all the basic accounting languages and speak them.
If you need to attend a course where you will be properly grounded in bookkeeping, then go for it. The chances of one’s financial records getting muddled up can only be described as so great that not taking steps to avoid such is courting disaster.
Personally, I've been more fortunate than many business owners as far as having good accounting record keepers is concerned. We have been mostly blessed with honest ones. Those with itchy fingers do cross our way from time to time. But before they are able to do any serious damage, God has regularly exposed them.
We thank God for this. But the truth is that we also do our due diligence. That is, we take following the movement of money in and out of our business as a serious business. That, of course, was as a result of the insight that Alhaji Adejumo provided.
I want you to take that lesson from me even if you don't learn any other thing from this book. It's not fun to wind up in a wheel chair with your account dripping in red. Or to get sunk six feet below when, but for the disaster that struck through your accounts department, you could have remained healthy, happy and lived long.
Let me repeat what you must do for emphasis:
Don't leave any aspect of your financial record to a third party, no matter how competent or honest that third party is. Make monitoring your financial affairs a joint venture between you and your financial managers.
Note: I've discovered that it is not every time when your accounts people don't have an accurate record that they are trying to swindle you. Sometimes they're just careless or lazy or both. When this happens, they'll fail to record certain transactions correctly.
If you are doing your own part, and being the business owner, you will spot these potentially dangerous errors before it is too late. 

Culled From Success Digest!!!