The importance of documentation and keeping the records in an organized manner are as important as running the company.
I have learned in my three decades of experience that documentation of everything and keeping it in an organized manner is as important as running a real business. There is no way that you can achieve excellence in any part of the business without documenting and keeping the documentation organized. The documentation can be categorized in three important categories:
1. Business Transactions: This includes all types of transactions starting from the registration of the company, having its articles, memorandum, trust deed, partnership agreement or operating agreement, whatever the case may be.
Then it comes to the secretarial services like keeping all the resolutions, minutes of the meetings, creating action items; assigning the tasks to the right teams and filing some of the documents with the regulators of the country/state where necessary.
Then the most important category of business transactions is the real business, sales agreements, vendors agreements, invoices, purchase orders, payment vouchers, banking transactions, taxes payment records, financial records and audit reports.
There is a very long list of business transactions but there is no point in listing all of them here, the above few can give you a fair idea of what we are talking about in this category.
The business is always a mess, the more it grows and expands rapidly, the messier it gets. The role of any company’s support setup (or CFO) is to keep cleaning this mess by creating a top-class organization and documentation. Fetching the most useful information out of this mess and providing it back to business development and business delivery leadership, to keep changing their directions in order to achieve the best possible results in the future, is the key to a better managed business.
There is no way that any CFO can provide useful information and the right basis for business decisions without keeping the document of every transaction and keeping it thoroughly organized. During my experience of three decades, I have found that many people who considered themselves very efficient ended up lost after their team members left, solely because either the proper documentation was missing, or it was not organized well.
So, this is the key for any business to succeed. Keep documentation and keep it in an extremely organized manner.
2. Policies: The policies of any company are like country and state laws that we follow in daily life. Just imagine life on a highly populated road without signals. Yes, the company without any policies and their disorganization is like driving on a high traffic road without guidelines.
Every company must develop policies for everything in the business, starting from attendance, leaves, code of conduct, anti-corruption, invoicing, accounting, publishing reports etc. The very long list of policies keeps growing with the growth of the business.
Like documentation, the development of policies also becomes a waste of time if not organized well and ensured to be read and understood by everyone in the company. The policies shall be kept in one place and divided into different sections made easy to access and search for all the stakeholders.
3. Processes: The processes are important to implement any policy correctly and more effectively. Any policy can be misused or used incorrectly if not supported with guidelines. The difference between policies and processes can be better understood by the following example.
Any employee can have 20 annual leaves, 10 sick leaves and 10 casual leaves in a year, in the company. This is called the policy in a specific company.
The process of availing these leaves or implementation of this policy could be:
An employee needs to apply on a system portal, the supervisor needs to approve the leave and HR needs to save it in the database and keep a record of balance leaves etc.
The most important part of processes is “the Business Processes” which is the spine of any company, whether it is a product company or services company. You cannot achieve excellence without documenting the business processes and keeping them well organized.
Once you prepare the business process and keep repeating the work according to it, the production of your products or services will keep improving. This can only be done if the process is documented and kept in the right place.
Modern organizations have started keeping a centralized inventory of all the processes, managed by a central person in the company. This is a very good idea to document everything and help keep them organized.
If you want to sustain for longer term in any business, start structuring your company, start developing your support setup (hire CFO services) to kick off the documentation process and organize them in a perfect manner. Prioritize the implementation of the three aforementioned categories, to have an overall better managed organization. A better organization of documents will result in a better and more smoothly run business.
Please feel free to ask any questions on the topic or share your feedback.
Qamar Abbas Sipra
Founder, FINACC Consultants