I have been involved in design and implementation of accounting systems for many businesses in Nigeria. Most often than not, I have encountered challenges in transitioning the current systems of some companies either to an accounting software solution or a tailored made system, using programs already at their disposal – Programs like Ms Excel.
Most of the challenges I encountered stem from the fact that some of these companies have existed for some time without any accounting system while others either have a manual system, a poorly designed template in Excel that cannot produce any financial report.
From empirical analysis garnered from my own personal experience with such business units, I realize that such business do not consider it necessary to hire an accountant at the point of start up while others do not understand the importance of setting up an accounting system. This is the BIGGEST mistakes that companies make and the consequences is not far-fetched. Among others, companies who so not set up an accounting system from the start would have the following problems:
- Inability to gauge the performance of the business.
- Blocked from bank loan – Bank would ask for your past operating results.
- Blocked access from equity funding – no rational thinking investor will put funds in a company whose direction is not established by the accounting system.
- Potential tax risk – The Tax authority have a sophisticated database to track companies who evade tax and your accounting system is a proof of your business performance. Failure to put things in right order may expose such business to judgmental tax assessment which will be difficult to defend.
- Other risks not highlighted – for instance, a business unit I worked for and met no accounting system almost lost N15,000,000 due to inability to capture the actual amount owed by a customer until I started to reconcile retrospectively.
Now that you have seen the mistakes and some of the consequences,what mindset would you have as an accountant working in a business unit without an accounting system or even a business owner making the same mistake.
From the above, my own position is that you get a system in place that will help you produce the statutory financial reports which you can also assess your financial performance. If you cannot get an accounting software, I can design a scalable solution for your business using a software that is already on you computer.
You can contact me on email@example.com or reach me through my Contact Page
If you wish any resource person for training your staff on business processes courses such as Advanced Excel, Financial Modelling, Cash Flow Management, Accounts payable Management, Sage 50, Quickbooks etc., you can also contact me