ENTREPRENEURSHIP TIP: Poor record keeping could be keeping your business down Alexander Forbes Insurance (AFI) has identified poor record keeping systems as a sign of a wider problem that impacts the risk management of small businesses and the achievement of their business objectives. Hilary Magede, Senior Manager of AFI identifies the key reasons why it is vital for small business to maintain records: Planning and measuring: Accurate record keeping provides a mirror against which any business can reflect its performance and progress towards its objectives. Records provide a starting point for measurement, analysis, investigation, structuring a budget and plans. Safeguarding assets and resources: Risk management involves the safeguarding and improving the value of resources (human, time, material, financial) to ensure their positive contribution to achieving business goals. Information on employees, including capabilities and/or qualifications, past performance, attendance and rewards are the starting point to managing human resources. Time is a resource that can easily be lost if not appropriately managed in any business venture and any business processes or activities have a duration defined in terms of start and end times and such time also defines achievement of goals e.g. a construction contract may have penalties if not delivered on time. Accurate information and data on assets and resources is necessary to monitor potential for damage and loss and react accordingly. Laws and regulations: Businesses in the financial service arena are required to submit and maintain records of their transactions for at least five years. Records are often required to support tax submissions; companies involved in import and export business are compelled to maintain records pertaining to duties paid and transactions involving controlled products; to attain amicable resolution in a business dispute records are required and the Companies Act specifies various regulatory requirements for record keeping. Insurance: Poor record keeping will result in a business either overstating or understating their insurance needs. Understating of assets will result in inadequate payment from insurers following a loss and overstatement of assets means the business is paying inflated premiums. At claim stage failure to maintain proper records may result in small businesses failing to prove their losses. Some insurance covers such as Fidelity Guarantee (theft by employees) require clear and audited financial records for insurers to give substantial and wide coverage. Labour and Workman’s compensation require that records of accidents and mishaps be maintained prior to paying claims. “Accurate, safe and reliable record keeping is not only key to effective risk management but is necessary in order to properly conduct business and unlock value for small business,” concludes Magede.
Posted on: Tue, 20 Aug 2013 06:03:11 +0000
Trending Topics
Recently Viewed Topics
© 2015