11-13-2007, 05:14 PM
Dear Bilal,
Thank you for the reply. It's very nice to have a quest for helping the family specially when they are broken and need your help. Family is the basic unit of the society and we can strengthen the society as a whole if we succeed strengthening our own family. I believe it.
Prologue
Coming to ur quesries. I will reply them one by one. Here these go
Question
1)Does accounting system may help me or in future to understand more in depth or in such business we use traditional methods of accounts?
Answer
It would be helpful to use the computerized accounting system providing you various reports and record like
-general ledger,
-debtors detail and creditors detail (with outstanding period / age analysis) through integrated sub-ledgers and modules,-
-generation of follow-up lists for debtors whose age is beyond the target date posted in the system,
-creditors payment alert reports, where creditors age go beyond the agreed date posted in the system
-master file of vendors,
-reporting like cash and credit sales and cash and credit purchases,
-ratios,
-bank and cash position for managing working capital (current and upcoming forecast)
-payment scheduling for creditors/vendors (as per agreement/PO)
-recovery scheduling as per agreed terms,
-detail of ur assets being used in business,
-incomes and expenditures including business expenses and household expenses (no expense or income to be kept out of books),
-receiables and payables to entraprenure (where it is not to be charged to expenses and is to be considered as advance or drawing),
-taxes paid or payable,
-cash and bank books,
-purchase day book (cash and credit)
-sales day book (Cash and credit)
and other such reports which may be obtained from the software just by having one time development of master scheme of codifictaion and consistently following the input data requirement of the system.
It would appear that this would be a time consuming and more than enough exercise, but in fact it is not. It is one time effort which will relieve you from all worries of pilferages, unseen losses based upon assessments and estimations, misuse of assets and resources, mis-handling of debtors balances resulting delayed recoveries and dis-reputing the business by inadvertently delaying the payments, non-estimation of actual expenditures of business and household resulting wrong assessment of profit/loss etc etc.
It will carry enormous benefits, but you and your staff will have to be adoptable. You will have to customize ur habits strictly in accordance with the requirements of the software. This is the basic point. People obtain high value software but mis-handle them and ignore the basic data input requirements which leads to incorrect information, and in their opinion, failure of the software.
Question
2)What is best way for collection from debtors? weekly or twice in a week.
Answer
It is best to collect Debtors as earlier as possible. Reduce the debtors collection period to the minimum if you want a relaxed liquidity. Now you have to decide how much you can reduce it. It may be weekly for practical reasons but not beyond the agreed dates.
Question
3)Should I start full record of expenditure and outgoing for home use from business or simply no record like in the past? Except bigger amounts.
Answer
Record means accountability. In fact no one is going to embezzle from his own business, but still, record should always be clean and complete. Charge what has to be charged to expenses either to business expenses category or household expenses category and debit what has to be received back by business even from the business owners. There is no question of leaving even a single rupees expense or receivable un-accounted for. Note this point strictly. This again requires acceptability and adoptibility by owners. It is hard for people and they feel it as if they are treated as dishonest. But still, record means accountability.
Question
4)Should I write down even cash sales? Right now we have fully record of Credit sales only.
Answer
My reply at point 3 has clarified this question as well. However, in cash sales you need not to record the account of customers. You can simply pass a collective entry after the day-end through cash sales day book by debiting the cash account and by crediting cash sales account for total of the cash sales made during the day. However, in credit sales, you will have to vouch the customerwise credit sales form the credit sales day book to record your debtors.
Question
5) How many books/files needs to make a system to cover all these transaction, or simple one spreadsheet for one work?
Answer
You need a software. Physical Files could be determined by your own requirement for placing vouchers, documents and statements / printouts.
Question
6) Which is more usefull Excel or Sage or other programme to handle such business where alot of debtors involve?
Answer
Software absolutely. Whether or not sage is dependent upon ur requirements. You should consult some software developer and get developed software as per requirements of ur business. Preparation of reporting framework and codification scheme for MIS (account codes, stock codes, asset codes, location codes, sub-account codes and cost centers etc) is the most specialised task. Involvement of some accounting specilist with software developer is vital for having desired results.
Finale
Where I have to send my consultancy fee invoice?
Hope the above will be beneficial.
Regards,
Khudai Khidmatgaar,
Kamran.
