Basic Records and Reports for Start-Up Companies

Earlier this week we discussed some of the basic internal controls for a start-up company.  In addition, it is important for the founders and senior managers to set aside the resources necessary for the creation of certain key records and reports that have proven to be especially useful for small companies.  Specific items include the following:

  • A daily cash report would reflect the opening cash balance plus any receipts and less all disbursements and should be reviewed to identify large and/or unusual entries.  The report provides notice of dangerous erosion in the cash position as well as the availability of excess cash that is not needed for current operations and is best transferred to short-term, income producing reducing. 
  • A monthly aged trial balance of receivables shows trends in the aging of accounts in comparison to the same report for the prior month.  The report also provides management with information on the average number of days’ sales expressed in receivables.
  • An analysis of returns and allowances provides information to management regarding potential products and sales problems.
  • A weekly report of overdue receivables should be obtained in order to alert management to collection problems that could ultimately lead to cash shortages.  With the information included in this type of report management can make decisions about what actions should be taken including personal phone calls, threats of legal action and/or suspension of future orders.
  • A periodic inventory report would include a reconciliation of changes in the total inventory since the last report.  Purchases or production of finished programs would be added to the beginning balance and shipments and other removals would be subtracted.  If possible, changes should be compared to previously established budgets or goals and to comparable periods in prior years.
  • Production summaries should be prepared on daily, weekly and monthly basis so that managers have current information regarding the quantity and quality of production activities.
  • A monthly product or process cost analysis should be undertaken in order to provide management with an objective measurement of manufacturing efficiency.
  • Sales backlog reports list all unfilled orders that have been outstanding over a specified number of days.  The reports should break down the information by quantities, dollar values and in terms of number of days’ sales or production.
  • Sales summaries should be prepared daily, weekly or bi-weekly and should provide details relating to sales activities broken out by salesperson, product and/or location.

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