A basic accounting system is one of the cornerstones of any successful Chama. Regardless of the size of your Chama; from a small one with just a handful of members to a large one with many members, you will need a chama management system. Here are ideas to help you set up a good accounting system.
Keep all Chama documents including invoices, bills, bank statements, receipts and other legal documents pertaining to your Chama.
Set up a filing system with an individual file for each type of financial document you keep. This may be a combination of physical and soft files on your computer. Have a single file for all documents that require action, and once completed, move them to their individual files.
Decide what level of help you require
Depending on the complexity of your Chama and your own comfort level, you may decide to handle all your accounting needs yourself. If not, your options include hiring a part-time bookkeeper, adding a full-time bookkeeper to your staff, or outsourcing accounting to a third party. If you look for outside help, focus on companies or individuals that specialize in Chamas.
Get professional input
Whether you handle accounting yourself or rely on someone in your company, it’s a good idea to have a professional accountant do the initial set up of your accounting system.
Enter data promptly
Any accounting software is only as good as the data entered into it. Enter transactions as soon as possible, keep records up to date, and backup, backup, backup.
Get receipts for every transaction, especially if you pay in cash. And reconcile your cash
and receipts regularly. Only pay expenses that have been authorized by the Chama, and before you sign a cheque, make sure it is for an authorized, documented expense. Reconcile your accounts using your monthly bank statements.
Decide on cash basis or accrual
Most small businesses Chamas use a cash basis accounting method. This means you record income when received and expenses when paid. The other method, accrual, involves recording income when earned and expenses when incurred. Most choose the simpler cash method, but a qualified accountant can help you decide which is best for your Chama.
No matter what type of accounting system you use, there is one rule you should always follow: Account for every penny. Even if you have just started your Chama, have a Chama current account. It will make things much easier.
Rule of thumb, remeber, GIGO? Garbage in, Garbage out? Ensure you are feeding the right data into your chama management system for it to give you the proper information to ensure you are able to make the right decisions
This post was written by Chamasoft
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