Strategies For Keeping Order
Many people really struggle with the administration side of their businesses. Valuable hours are unnecessarily wasted and lost performing gigantic administration duties that should, at worst, take no more than minutes to perform.
For those of us who own our own businesses the administration nightmare can translate to thousands of Rands’ worth of time lost. Often, the result is that the admin does not get done and the consequence of that is total chaos!
Chaos, when documentation cannot be found, that could end up costing physical money in terms of penalties, interest and worst of all – loss of a sale or even loss of a client or a contract. None of us can afford this. It is therefore imperative for us to ensure that our admin is up to date, filed neatly and done in the most simplistic of ways.
There are several “Accounting and/or Banking procedures” that must be followed in order to assist in making full usage of the allowances that we are given by SARS. To utilise these properly the following need to be adhered to.
Receipts and banking
One of the first lessons that I learnt in life was that when you pay for something, you expect a receipt. It is one of the basic rules of bookkeeping, particularly if the transaction has been conducted in cold hard cash, and it also is one of the saviours of human folly! By issuing a receipt for money received, you are protecting the client (or the person who gave you the money), you are making life easier for your Bookkeeper/Accountant and you are providing an audit trail for anyone who needs to have one – you have nothing to hide. Receipts should be made out as soon as the transaction has taken place.
When a receipt is cancelled, for whatever reason, it must be retained. Receipts should be numbered and issued sequentially. The original should be handed to the payee and a copy must be retained for administrative purposes. When receiving cheques as payments, take the time to have a quick check to ensure that the cheque has been correctly issued.
The issue of cheque payments is a multi-faceted one. It includes cheque preparation and cheque signing as well as all the controls and government regulations that go with it, not to mention the bank’s requirements as well. This is to ensure that cheques are properly made out in respect of authorised transactions and signed by authorised personnel. Cheques can easily be forged and it is therefore well worth your while to ensure that the correct procedures and controls are in place for your own protection. In this electronic age, Internet banking has become the norm, but these transactions should be prepared as well as executed in exactly the same manner, and with even more controls than cheque transactions.
It is not a good idea to make out a cash cheque. Firstly, you are putting yourself at risk as there is no audit trail as to where that money went to. If you want to cash a cheque for petty cash purposes, it is preferable to write the cheque out to the person who is going to cash the cheque.
Government legislation has been passed, stating that all cheques (other than cash) must be crossed with the crossing “NOT TRANSFERABLE”. Furthermore it is no longer possible to cancel the crossing on a cheque. Cancelled cheques should be retained for administration purposes.
It has been legislated that cheques bearing any kind of amendment or alteration will no longer be honoured by the bank. Fill out your cheque counterfoil, so that you know what the cheque was for.
Cheques can only be signed by authorised signatories. Don’t give signing power on your bank account to all and sundry! Never, ever sign a cheque and leave it “blank”!
Invoices are raised to charge your clients for goods and/or services that you have provided. Invoices must be raised and issued sequentially. The original must go to the client and a copy kept for reference purposes. If you cancel an invoice the original must be kept for reference purposes. The ‘terms and conditions’ that appear on your invoice must be the same as the ones in your contract. If it differs in any way, claims may be dismissed.
Credit Notes should only be raised when financial errors have been made in favour of the client. Credit Notes must be raised and issued sequentially. The original must go to the client and a copy kept for reference purposes. If you cancel a Credit Note the original must be kept for reference purposes. The Credit Note should be referred to the Invoice that it is correcting for reference purposes.
About the author: Viljoen Consulting is owned by Nikki Viljoen. Nikki is an Internal Auditor and Business Administration Consultant. Although the economy is supposed to be ‘grown’ by Entrepreneurs and SMME’s, these are the very people who are most at risk in terms of noncompliance and ‘white collar crime’. A “Start Up” workshop for new businesses has been developed, that focuses on making the new business owner aware of what legislation needs to be adhered to as well as everyday tips on administration. For further information, please contact Nikki Viljoen on 083 702 8849 or email@example.com.
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