Business growth and expansion requires detailed planning. Honestly, you cannot just wake up the following day and decide you will open a Branch of your business in another location without carefully considering Inter-Branch Accounting issues. In fact, many entrepreneurs find their businesses crumble as a result of unplanned and uncontrolled growth.
It is clearly evident that many businesses today operate through branch networks but the fact that other business entities manage various branches successfully does not imply that managing a branch is that easy. The reality though is that managing remote branches requires a lot of accounting effort to operate effectively.
My focus in this article is to draw your attention to this topic of Inter-Branch Accounting, how it may affect your business if poorly handled and look at a Simple way to account for transfer of inventory and cash items to any branch in your business.
An effective branch accounting system can give you the ability to effectively control the operations of your branch as well as manage Stock movements and control expenses easily.
The outlining principles of Inter-branch Accounting require that you keep proper record of the cost of goods sent to your branch from the main warehouse or Head office and any goods returned back, keep proper record of all stock movements from time to time, keep a record of all expenses including totals of credit sales and amounts collected from customers at the branch you operate and also keep a record of all cash receipts and payments made by the branch before you can finally prepare the accounts of your business as a whole.
You will note that, operating business branches results in various general ledger accounts and a large number of inter-branch transactions which require proper processing and reconciliations. If any of the inter-branch entries are not processed and reconciled properly, they may give rise to financial irregularities which can affect the profitability and growth of your business.
But what is the better way to expand a small business into new potential markets and yet financially manage it effectively?
My answer to this question is this. Though it may be practically impossible to be in two places at the same time, with continued advancement in technology this is eventually “almost becoming possible.”
Automating of an Inter-Branch Accounting System greatly improves the operations of a business. It is therefore just common knowledge that most if not all businesses such as Banks and retail stores which operate branches worldwide continue to make investment in various Accounting Software for Inter-Branch Transfers (IBT) to enhance their Accounting system.
Before you think about opening a new branch of your business, consult an expert for advice on how best you can setup your accounting system to handle Inter-Branch Accounting in a simple way.
About the Author:
Fixed Asset Consultant at Prosperity Agencies Limited with over 10 years practical experience in physical verification, bar-coding of assets and fixed asset software implementation +260 211 239859
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