Business basics

Business basics

Enthusiasm may be the first brick in starting a new business venture, with admin taking a rather dull back seat.

But make no mistake, administration and documentation form part of the foundation that provides a solid base for your business to grow, says Leigh Livanos, head of startup business at Standard Bank

“Time spent on documentation sets a professional tone for any business. Documented procedures ensure that the various tasks in your business are done consistently and accurately,” says Livanos.

The basic building blocks of good administration and documentation are:

Written policies and procedures

These ensure that you have a constant reminder of when and how things should be done, whether it is on a daily, weekly or monthly basis.

This means that things aren’t easily forgotten and, if you have employees, avoids misunderstanding about what exactly is required to carry out a particular task.

These written policies and procedures should also become part of the employment record for staff.

Reviewing the policies and procedures, testing the employees’ understanding of the task it describes and defining consequences if a job is not undertaken correctly, can set the basis for sound labour relations.

An asset register

An asset register simplifies life for any business owner.

It should include computer equipment, furniture and any other equipment essential to carrying out business. A register helps an accountant work out the depreciation rate.

In the event of a theft at the business, an asset register which lists equipment and serial numbers becomes invaluable when claiming insurance.

Receipts 

Every purchase made by your business should be verified by a receipt, especially when items are bought with cash.

More than just a piece of paper, a receipt protects both parties involved in the transaction and helps create an audit trail.

If payments are made electronically, the need for a receipt falls away as details appear on the bank statements of both parties.

Although cheques are very rarely used these days, there are procedures to follow if a cheque is returned because there are insufficient funds; the cheque is stale (more than three-months old) or any other reason.

Petty cash

Petty cash is meant to cater for small and unexpected purchases. It is also a function of the business that needs to be carefully monitored and controlled to avoid money being unaccounted for.

Deciding how much money to keep for petty cash purposes depends on what your typical monthly cash expenditure is.

Set petty cash at this level and add 20% for emergencies, and this should be a comfortable level. Make sure all use of petty cash is appropriately recorded.

“Putting controls in place ensures that everybody meets their obligations, something that makes for happier workers,” says Ms Livanos.

“These items can make the difference between a company running smoothly or people misunderstanding their roles and making decisions that need to be changed, wasting valuable time and resources.”

SOURCE: www.fin24.com

 

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