As a business owner you might have heard the term Recording business transactions, maybe from your accountant or your business coach.
Recording business transactions is merely an activity to make note of your business cash inflows and outflows. This is done to keep track of the movement of cash in and out of your business. By doing so, it helps you stay on top of your cash – which is your ultimate dream.
I am sure you have a series of questions popping in your head right now – Where to record? How to record? How often? Who should do the recording?
Let us break down each of your question.
There are two times you must record your business transactions: Real time and end of the month. In this article we will be focusing on recording real time.
Recording real time – benefits and reasons
By recording real time I mean, recording business transactions as you spend or receive. You might ask, why do you have to record while your bank app does that for you. Well, there are benefits to manually recording them:
· You categorise it appropriately.
· You visually take note of the outflow as your record it.
· You also compare the outflows with the upper limit set on your app.
· All of this then helps you to be more diligent with your business expenses.
These benefits are experienced only when you as a business owner do the recording activity yourself and do it real time.
Of course, it is not practical to open an excel sheet each time you swipe your business card, and that’s where smartphone apps come very handy. I don’t mean complicated accounting apps which needs subscriptions. Look for simple, free apps which help you record expenses - and nothing more than that.
Do’s and Don’ts
You don’t want to be spending hours every day on recording business transactions and neither get obsessed with your cash flow! So, there are something’s to keep in mind while you record real time:
· Record only those expenses that are NOT paid through a direct debit from your bank account.
· Work out an upper limit for those expenses and make them visible on your app.
The goal here is to make you think before you swipe your card.
Next steps
At the end of the month, you will then create a statement using information from the app and your bank account to get a macro picture of your cash flow for the month, which is a crucial step in your decision making process as a business owner.
Want to see yourself taking control of your business cash flow?
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Written by
Mrudula Muralidharan
Founder & Finance Coach
Million Goals
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