(This is the 3rd part of a 4 part series)
Maintaining revenue, operations, payroll and expense records along with generating periodic reports are essential for overall performance assessment of the company. Adequate recordkeeping in the following areas is valuable for internal management as well as for acquiring investment for future growth of the company.
In most of the cases only invoices are considered as evidence of revenue. However, contracts, service agreement, purchase order from the customer, or similar communications and documents also provide further details about the nature and conditions related to the revenue. Multiple year contracts, which are not yet over, provide a reasonable level of assurance to the investor in terms of future earnings from the company. Therefore, these revenue records should be maintained regularly.
Operations of the company signify the value addition related activities carried out by the company that generates revenue. These records are very critical in terms of assessing the deliverable capacity of a company. It serves as an indication of the volume of work the company can handle and level of investment required to scale up the operations. In Nepal, very few companies have a practice of documenting these details.
Maintaining payroll records and processing payroll timely and appropriately is a key indicator of company’s healthy HR policies and procedures. This provides information about the company’s human resource strength. Following measures can help companies maintain payroll records.
One significant parameter in profit generation of a company is the expenses it has to incur to generate revenue. This not only helps in cost control but also provides inputs for value analysis and value engineering that can be carried out by the company for its products and services. The level of details recorded adds to the quality of analysis that can be carried out. Following are a few measures to ensure adequacy of documentation of expenses:
The annual and periodic reports are valuable source document for financial information and for corporate governance. Generation and review of periodic reports on timely manner is a sign of healthy management mechanism. It indicates that the management is on top of things in terms of operations and finances related to the company.
The periodic reports are used to monitor the state of affairs at a point in time and performance of the company during a period. It is useful in monitoring the check against the budgets and benchmarks and make adjustments in order to optimize the results of the company.
The following are few of the reports which are widely used: