Record Keeping- Day Two

Today we are going to continue where we left off. Just as a little refresher, we were talking about the importance of record keeping.

Also, just to let you know you can archive old newsletter articles in my blog. Everything that is posted here will be in my blog plus a Importance of Record Keeping – Part Two
whole lot more information.
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You can find my blog at ==== www.instantdaycareaccounting.blogspot.com

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In part one we discussed some of the reasons why record keeping is so important. Remember the story about running around loosing your clothes, car, keys, I’m sure you get the idea.

Today we will discuss some of the mechanics of how to put record keeping to use in your business.

In the world of accounting, bean counters (that’s me) have developed something called checks and balances.

The same systems of checks and balances can and should be used in your business. Some of the detail is unnecessary but the basics should be understood and you can adjust the system to your business.

The ultimate goal of a system is verify that all valid bills are recorded and paid in a timely manner. In a large corporate setting we add a separation of duties to try and ensure that all bills are valid and to ensure that they are paid.

The system has seven basic steps with some organizations adding more detail when necessary

Step One: Purchase Order
Step Two: Receipt Journal
Step Three: Invoice
Step Four: Voucher for Payment
Step Five: Check Payment
Step Six: Reconciliation

In step one a purchase order is drawn up and the item is ordered from the vender. For the small business owner, you should make a list of what you need to buy from the store. You will go to the store and buy the item or order it from your catalogue. You will receive a receipt with the item and you will bring it back to your place of business.

In step two the items are received into the store or business and checked against the purchase order to verify that the order was correct. Again in your business you will verify that you brought everything on your shopping list.

In step three the invoice is received for the purchase order. This invoice is matched up with the purchase order and receipt journal to verify that the merchandise was received and the invoice is valid. You will have all of the receipts for the month put into a pending folder waiting for the bill from the vender. These receipts will then be attached to the invoices before going on to pay your monthly bills.

In step four a request for payment is made up of all invoices that have been verified in step three. In your business a list of bills to be paid must be drawn up so that you can see how much you owe to the different vendors.

In step five the valid vouchers from step four are then processed for payment with a check. This is the same for you. You will obviously need to verify if there is enough cash in your bank account to ensure valid payment is made. That means you need to know what the balance in your checking account is. For some of you this is an area to definitely improve on.

In step six the Bank Statement arrives and the checks that were issued are reconciled to the checks that bank has processed. This is the same process for you.

Why do large corporations go through all these steps just to pay a bill and how does this relate to you. The whole purpose of this process is to verify that the company gets what they ordered and pays for what they get. It also assures that all the expenses are accounted for and that all the checks written accounted for.

This brings up a point as to what the proper system is to use for accomplishing this vital task. There are numerous different solutions out there.

One of the most popular and the one I personally use and recommend is Quickbooks.

Quickbooks is an online software solution that allows you to know where you are in your business up to the minute, while also allowing me your accountant to help you to make sense of the numbers. QuickBooks is also wonderful during tax time. It makes my life as an accountant much easier and saves you the client time and expense. Having everything organized efficiently allows less time and fuss when completing and returning tax returns.

The second option is Calendar Keeper software or the manual book. Redleaf press has come up with a way to truly organize your business life and helps you to keep track of your business on a month to month basis. No one solution is the best for everyone. The key is to start your system today so you can start the process of taking control of your business now.

What ever your choice may be I can help you with setting up both options.

For assistance with QuickBooks and Calendar Keeper contact me at 262-798-3520 extension 103 or email me at bob@grothcpa.com

We currently offering Redleaf Products at a 10% discount. What this means is when you stop by the office you can pick up your books from Redleaf and save your self shipping and 20% off the catalogue price.

Of course, I can ship you these books as well, and you will still save 20%. Every penny counts!
So, let me know if there is a book you want, I can save you money. That’s the whole idea.


Saving you money,

Bob Groth


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How much is one good accountant in your business? Robert Groth E.A. has created an accounting practice centering on daycare business owners. Find out what other daycare owners have to say about Robert Groth.

“Robert Groth is informative, helpful and resourceful. He offers strategies that increase and improve your business. In a nurturing, caring profession, Mr. Groth has encouraged me to nurture and care for my business”.

Debra Noel
Noel’s Early Childhood Center
Milwaukee, WI

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