THE EDITOR, Sir:
Unwittingly, some businesses, by their actions, create certain situations that can lead to financial ruin. Reproduced below are 12 of these issues. By highlighting these issues, it is hoped that businessmen will be alerted to their potential for business failure.
1. No information was sent to the company's accountant since the last tax returns were filed.
2. A stock of invoices representing two months was never entered into any ledger.
3. Cheques received from customers were never deposited to the bank (especially those that were originally postdated).
4. Some of the cheques were stale-dated (and, therefore, could not be negotiated).
5. Invoices for work done were never sent to clients.
6. The computer specialist (and other contracted workers) refused to correct simple problems/issues because of lack of payment.
7. Payments for supplies were not properly filed.
8. There was no reconciliation of the business account for the past six months.
9. Managers' secretaries depended on the online cash balances to determine the business' cash position.
10. Because reconciliations were delayed, cheques were returned for insufficient funds. This was because of a failure to record cheques drawn and not yet presented to the bank. Returned cheques can ruin your relationship with your bank.
11. When the bank required a statement to review the business current account, none was available.
12. The Tax Department issued a statement that the business owed taxes and there was no central place where receipts for tax paid could be retrieved.
So how well are these firms doing? The sharp answer is that it is hard to tell.
The real message here is that a business, without basic financial data is like a ship without a rudder or a boxing match where the score is not known by the players until the game is over. Having money in your business bank account is not good enough. You need to always be aware of your financial situation.
The accounting and bookkeeping functions are easily outsourced, and an accounting firm is geared to assist you in your business processes.
A&N Robinson & Associates
Greendale, Spanish Town