Many shops sell well, but at the end of the month they can't tell how much profit they really made. Usually it's because a few basic accounting rules aren't followed. Follow the rules below and the picture becomes clear.
1. Keep the shop's money and your own money separate
If you take money from the cash for personal spending, record it as an “owner's withdrawal”, not as a shop expense. Otherwise profit will look lower and you'll lose the real picture.
2. Match the cash every day
At the end of the day, count the money in the drawer and match it with the software. A mismatch gets caught while it's still small, instead of growing big by the end of the month.
3. Record every expense
Rent, electricity bill, snacks, delivery — record the small expenses too. Small expenses add up to a big amount by the end of the month.
4. Keep installment dues separate
An installment sale means the money hasn't fully come in yet. Track sales and collections separately, so you know how much money is stuck in the market.
5. Check profit and loss once a month
At the end of the month, subtract all expenses from income to see the net profit. If the software does this for you, it saves time too.
These rules aren't hard — you just need to follow them regularly. And leave the jobs the software can do by itself (posting sales and installment collections) to the software instead of doing them by hand.
Read more: Cash flow management · Paper ledger vs software · Accounts and bookkeeping
