Good Account Keeping as the Basis for any Successful Organization

In Colombia, my home country, there is a colloquial phrase that I’ve heard elderly people say. I can translate the phrase as follows: I like my “accounts clear and my chocolate thick”. The first part of this sentence talks about good account keeping and the other one is about hot chocolate or cocoa, with milk and/or water. The chocolate part is in reference to this beverage, which was quite popular many decades ago in some colder areas of Colombia, such as Bogotá.

This expression can be quite simple, but has a high degree of wisdom. For those of us who have run a company, we understand that account keeping is very important and that this apparent simple item can be the difference between succeeding and failing. Accounting is especially important in the early stages of any entrepreneurship, when the business partners loan money that has to be repaid in the future.

Many years ago I spoke to a very important businessman. We were talking about my new company and he asked me how much money was being paid to the business partners. It is usual that companies don’t pay their business partners in the early stages of the project, as the resources are quite limited. This person explained to me that this is a bad practice, as everyone needs an income to pay for different things. This vision can be quite optimistic and idealistic, but I agree with the premise. However if a company has business partners working temporally for free, we have to keep this information in the account as money the company owes them.

Account keeping is definitely very important and a key element for every organization. We must have a clear record of the money that comes in and out. This labor usually is the responsibility of the accountant or his auxiliary. However, for those of us that are on the management side, we have to understand accounting concepts and being able to detect mistakes.

This subject has great reach and goes beyond enterprises. Something as simple as a group of friends going out to have dinner and some beverages requires tab keeping. An easy solution is to divide the check by the number of people that attended, but sometimes people feel cheated by this simplistic solution. In the same way, it’s important to keep track of income and expenses in couples’ life.

I wanted to address this subject, because it’s often overlooked and we don’t give it the importance it has. In enterprises most entrepreneurs have no knowledge of accounting and this is a boring subject. In our daily life, many people see this topic as something dumb and without importance. The reality is very different and the subject is quite important, as keeping record of our accounts can save us from problems, like robbery, fines with government agencies and complex situations with other individuals.

Image taken from Flickr.com

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