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The accounting checklist

Cinch cash flow problems with correct accounting.
By Henry Ong |

When you are in business for yourself, you normally would get so busy with the operational aspects of your company. Very often, in fact, some entrepreneurs tend to focus too much on marketing and promotion at the expense of finance and accounting, thus often running into serious cash flow problems. To avoid such situations, you must ensure that the accounting function is not left entirely in the hands of your bookkeeper. You need to be truly in charge of it.


So what are the things in accounting that you should know?

On a daily basis, you need to check the daily summary of your sales and cash receipts. The total sales for the day may be a combination of receivables, which are what your customers owe you, and of cash sales from outright transactions. You should also check if the cash on hand and the bank balance by end of the day are all properly accounted for. You can do this by reviewing your cash position report where all the cash in and cash out transactions for the day are recorded. It is possible that some cash collections for the day may not all be deposited in the bank or kept on hand because some of the cash might have been used to pay expenses or salaries. In this case, you will need to do some adjustments to record the correct amount.



Every weekend, you need to check your accounts receivable list to see which of your customers are not paying on time. Reviewing the credit profile of your customers individually will give you a better idea for your collection strategy the following week. You can give your customers a telephone call, pay them a visit, or write them a letter--whichever you think would be most effective to get them to pay you.


On the other hand, you should also check your accounts payable for the week. Find out which payable you can pay immediately with cash discounts, and which you can afford to delay without annoying your supplier. You also have to prepare how much money you need for your payroll for the coming week, and how much money you need for such other expenses as withholding taxes and VAT payments. By budgeting all the payments, you will get a good idea of how much money you need to raise from receivable collections and cash sales.



On a monthly basis, you will need to review the work of your bookkeeper. You can check if all the journal entries made are properly classified and posted to the general ledger. For example, assume that you are renovating your store and you have made payments to your contractor. It is possible that your bookkeeper may wrongly record the transaction under salary expenses instead of correctly capitalizing the payment to the contractor under fixed assets. This could happen especially when there are no clear guidelines for the bookkeeper on what chart of accounts to use for particular transactions.


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