Any disputes regarding an Invoice is always detrimental to healthy business relationship and is also tedious for accounting and purchase department. Such reasons makes it necessary for the company to use more analytical aspects to improve the function of cash management, operation and customer or client relationship.
The quality bookkeeping and filing system is essence of the successful book keeping. To avoid any discrepancies and miscalculation which may cost dearly to the business, it is necessary to maintain efficient bookkeeping, where all invoices are entered and issued correctly through efficient book keeping.
The following points, if followed properly in organizing Bookkeeping, would go a long way in managing business successfully, save you money from errors and keep you update about the functioning of the business:
It is necessary for the business owner to understand that prompt sending of the Invoices to the client or customer is very essential. Such practice of Invoice sending helps in regular cash in-flow, avoid none sending of the Invoices. Once the business transaction is complete, a customer also expects to receive the Invoice.
The bookkeeping should record correctly the payments received against the Invoice. The situation becomes odd; if the customer is resending the already paid Invoice or same Invoice again, which may be harmful to the healthy business relationship. Again you as a business owner should be aware of the customer owing you the money and which customer paid. To avoid such ignorance and know about payment transactions, it is essential that the bookkeeper should attach receipt immediately with the Customer Invoice.
The bookkeeper should maintain Tax Invoices because not all purchases are taxable. The correct tax amount should be entered correctly and records are kept properly. Same procedure applies for the direct debits from bank account. In the same way outgoing Invoices should mention taxable amount clearly and recorded correctly.
The business owner should open up a bank account in the name of business for all his business transaction, including purchases and sales. All business expenses and incomes should be transacted through bank accounts. Even if you use a Credit Card, one particular Card should be fully utilized for business operations. Such centralized system will help you greatly, when you reconcile your Invoice, as the bank statement can be tallied with your bookkeeping or financial transactions.
The copies of the bank statements and Credit Card statements mailed to you should be kept properly. If you have the facility of Internet banking, then you can regularly print these statements and document them safely and in proper order for detail checking.
Avoid or minimize your personal transaction through business bank account. Such practice will help in reconciling your Invoices and Account Statements.
The invoices received through the mail, should be maintained in Invoices to pay folder immediately and paid invoices should be kept in the Paid Invoices Folder.
The Invoices paying due date and Invoices paid date should be recorded properly. Such practice will help to understand which Invoice is to be paid immediately and which can be paid in future date. Through this process, you can also avoid paying twice if you have maintained Invoice Paid folder.
In the same way you can maintain the folder of Invoice issued and Invoice Payment Received folder, which will avoid resending the invoice, for which the payment is already received or you can send the reminder for the Invoice against which the payment is due.
You should keep, Invoice related essentials, such as check book, envelopes, stamps, pens, pencils, a calculator and Invoice book together to save time and for smooth functioning of your work.
The best practice to follow for Invoice reconciliation is to record Invoice payment immediately in your cheque register. Similarly, payment received can also be recorded in your Invoice ledger. Both these transactions can be maintained in the computer.
Marking Paid Invoices with date and amount paid, is also good way of reconciling of the Invoices.
It is also healthy to attach, all purchase Invoice related supporting receipts and documents, such as order slip, article details etc. for Invoice reconciliation and verification.
The best way to reconcile an Invoice is to maintain efficient Filing System, which collate all Invoice related information. The computer software may be handy for your purpose, where you can maintain, Sales, Bank Statements, Expenses, Purchases, Taxes and other miscellaneous business statements.