Virtually all business and financial experts agree that bookkeeping, an aspect of small business financial management is vital to the sustenance and expansion of a business. But many operators of Small and Medium Enterprises (SMEs) usually shy away from doing it.
According to foreword written on the Nigeria SME Toolkit blog, without bookkeeping, there is risk of hitting cash flow crisis, wasting money, scrambling for receipts, facing other financial information issues such as tax matters at the close of the fiscal year and also missing out on opportunities to expand.
To ensure that their bookkeeping gets done, SME operators can utilise the services or products provided by experts in this field. Ronke Lafinhan, chief executive, Rictor & Co, is one of the accountants committed to growing small and medium enterprises through providing services and products to meet this vital need of business operators. She says, “Rictor& Co is an accounting services firm. We produce record keeping journals such as sales records, purchase or expenses records, cash books, time planners, costing records and all other source documents like invoice booklets, receipt booklets, stock cards, payment vouchers and so on.”
Lafinhan further says, “For startups, rather than incurring additional costs in printing the entire source documents mentioned above, they can buy them at affordable rates. The reason we design these is to make record keeping easy or simplified for small business owners. These records are the starting point for small businesses before they migrate to software accounting packages and some other more sophisticated record keeping methods while it can also be used as a backup for all the other records even if in the software.
Also, for tax purpose, the tax officials normally demand for the hard copies of records. Banks also do for loan purposes as well as other private investors. Investors know that if you have been making inputs in these hard copy record books for about three years and they call for it, you cannot easily make changes whereas if it is in excel, the figures can be easily altered”
Speaking further, she says, “The records are to help SMEs have a good start in proper record keeping. They already have all the columns that need to be filled, so all the business owner or the person in charge of the accounts needs to do is just to enter the details. With these records, they do not need a formal training in accounting or record keeping to enter in the details.”
On corresponding bookkeeping services, she says, “I also offer accounting services for the small and medium businesses in setting up proper bookkeeping and accounting procedures in their businesses. Some business owners may understand other aspects of their businesses very well but may not know how to do proper accounting for their businesses. Some do not even know what they need to start with it. So I help them set it up and I do follow-ups afterwards for about one month. During that period, I would collect the data that they have entered into the books and help them prepare a balance sheet and other income statements.”
Stressing the importance of bookkeeping, Lafinhan says, “Such records help a business to measure performance and grow the business faster. These records would help the business operators make the right decisions and present proper records to tax officials and investors. The records help to do proper costing. That way the operators would know how much they are incurring in producing the product(s) or rendering the service(s). Without records, a business may be fixing a wrong selling price. That is the reason a lot of people are doing business and they are not making profit yet they cannot finger what they are doing wrong. Actually, there are some hidden costs or overhead costs that they may not be capturing. These costs are real. They include seemingly insignificant things like buying of recharge cards or transport fares for short trips within the locality. A business operator spending as low as N100 on recharge card or transportation daily might think the amount is too small to capture in the records. But when it is recorded daily, at the end of the month, they would be shocked at how much it amounts to. This realisation may lead to decisions such as sending of text messages to pass across information instead of phoning or making such short trips.”
Challenges/ future prospects
Explaining further, Lafinhan says, “The awareness on record keeping importance is growing but still not strong enough, so there are business owners who still do not want to spend money to ensure proper record keeping. But things are gradually changing for the better.
I expect that the businesses of all the people using records produced by my company would grow and expand to the point that they would need accounting software packages. I can get the software, install them and train them on the use.”
She also has the story of small beginnings to tell, saying, “I started the business December 2010. Before then I worked in the logistics department of a large food company for six years. I studied accounting in university and I am still studying to become a chartered accountant.”