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What is bookkeeping? Bookkeeping is about good record-keeping. Basic record-keeping is often the fundamental building block of our financials. Having a systematic approach helps to organize our affairs and allows us to retrieve the right information at the right time. Over the years, i have seen how a lack of discipline in good record-keeping can have disastrous and costly consequences not only for businesses but also for individuals. There is no doubt that disorganized affairs inevitably led to delays in meeting statutory requirements and also result in poor decision making. Sometimes it is not the lack of data, but the failure to retrieve them, that can be equally devastating.

Information Problems

In the modern world, with the increasing aid of technology, it never ceased to amaze me that the organization of affairs do not necessarily improve with it. The information issue often falls into three basic categories:

  • Failure to record information
  • Failure to retrieve information
  • Failure to present information

Any one or a combination or all of the above three categories can create problems with how we organize our data or information.

Evaluating Bookkeeping practices

Our bookkeeping methodology needs to be efficient and effective. Lacking efficiency but having effectiveness can cause unnecessary delays in getting things done on time. Lacking effectiveness but having efficiency can cause inaccurate information that we rely on to make decisions or for reporting. Both efficiency and effectiveness need to be incorporated into good bookkeeping practices. Understanding these two elements will help us to evaluate our bookkeeping function.

The effectiveness of good bookkeeping practices can be attributed to the 3 basic categories outlined above. We need to know if our current bookkeeping or record-keeping methods are addressing the 3 categories; Record, Retrieve and Present. Failure to address ALL categories will result in an ineffective bookkeeping practice.

The efficiency of bookkeeping often goes back to the way we do things. Technology, if utilized properly, can greatly aid the way we do things and could even speed the process up considerably. The faster we do it, the more efficient it becomes. It is at this point that many business owners or individuals rush out to buy the latest software. This may not be necessarily good as we actually need to take a step back to consider even before the actual software purchase. The way we do things often needs to be evaluated before we can change or embrace the use of technology to improve. A disorganized approach often translates into a disorganized use of software/technology which programmers label as the ‘GIGO’ (Garbage In, Garbage Out) effect. Outcome is a organized clutter which does not really get us anywhere.

Problem Resolution

I have always believed that with any problem, we start with the simplest solution or approach and then worked our way up should the need arise. A balanced approach is also important where we also need to weigh in our objectives and the existing resources that we have in implementing good bookkeeping practices.

To address the above 3 basic information problems, we need to look at each one carefully and ask some key questions:

  • Recording Failure – What do i need to record? How am i recording this?
  • Retrieval Failure – How do i retrieve my information?
  • Presentation Failure – What format do i need to present the information in?

Recording basics are often addressed by the Internet banking facilities that we have in today’s context. Downloading a basic CSV files often includes 3 fundamental pieces of information, namely; Date | Description | Amount. For simple taxation and basic business needs, these information are more than enough to meet our requirements without too much input or interference from our end.

Most Internet banking facilities that we have often have a limit on the amount of data that we can download. Sometimes, we may not be able to retrieve information dating back X period ago depending on the banking provider we are with. This is where a disciplined and systematic approach to downloading these CSV files are important. On a general note, a small user need only to do this four times a year, one for each quarter. This is probably the basic minimum that we need to do – four times a year. By doing this, we have eliminated both recording and retrieval failure.

Having a folder full of CSV files may not seem ideal for presentation purposes, for example, presenting records to your accountant or tax agent for year end purposes. Even with this in mind, it is definitely a much better approach than providing a shoe-box or inaccurate spreadsheets to your accountant. At the same time, not every item on your CSV files may be relevant for presentation or disclosure purposes. One of the most cost-effective way is to combine the four (assuming that you download four times a year) CSV files together into one Excel spreadsheet. The function required to do this is merely a ‘Cut and Paste’.

At this point, what you probably need to be very mindful of are duplicates as your download points may include information that has already being downloaded in a previous session. A very practical but often overlooked way for dealing with this is to provide a specific date range AT the point of selection for your csv file output on your internet banking.