Why Documentation Is Required In Business Transactions

Posted by: lukwago J in Business April 19, 2021

Most startups do not know the importance of books in recording business transactions. When I started my company I was in the same position, I learned how to keep records as the business was growing.

There are common books that are required to record daily business transactions regardless of the type of your business, these are as follows;

1). Cost of sales, these are records mainly purchases. You may record these transactions in a book called “Goods receiving note ”

2). Sales book, mainly this the receipt book that is used to record sales. It is important to record every income in terms of sales no matter how small it is.

3). Petty cash, this is a book which records all day to day small cash payments. Every business requires money to function on daily basis.

4). Dispatch book, this book is recorded all transactions of goods that are dispatched from the stocks. Everything that is received through goods receiving book must be recorded in dispatch book when such transactions is happening.

5). Bank statement records, it is important to have a track record of bank transactions that occurred on monthly basis. You should be in a position to know how much you received in your bank and how much you paid through bank transfers.

6) Employees log book, this is the book that all employees must log in as they register for work and log out at the end of the day. This information is very crucial for the HR when preparing wages and salaries.

There are so many records that may be required depending on the nature of your business. The information that is captured in these books will help you to compile your profit and loss analysis. It is also helpful when preparing financial statements.

If all transactions are recorded properly, it will not be easy for a business to collapse. It will also reduce losses due to theft. Your loss control depends on capturing of information.

I never went to school to learn these structures. This are process that I learned in the period when I was building my company.

When people talk about building a company, this is exactly what they refer to. Building a company simply means building structures and processes that allow an organization to function and make profit. When the business is making profit, it will grow and expand.

I hope this information will help you. Take further action to research more and align your research to the nature of your business.

By B. Marambire

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