Experiences from an Entrepreneur

When Hansel and Gretel were left in the woods by their evil step mother, Hansel’s sharp young mind thought quickly and left a trail of white pebbles behind so he and his sister could find their way home. The second time they were abandoned, he left a trail of bread crumbs. Even though the second attempt to mark the pathway failed, the concept is brilliant. Leave a trail!

Every transaction that happens in a business should have a supporting document(s). These documents are used as evidence that a particular business transaction actually happened. Supporting documents are used to make accounting entries. They also serve as support during an audit.

These documents should include the date, the amount, and a description of the transaction. These papers are known as source documents, supporting documents or are sometimes referred to as a paper trail.

Examples of supporting documents include but are not limited to:

Credit card receipts
Checks
Invoices
Purchase orders
Time cards
Deposit slips
Receipts

After a transaction has been entered, these documents should be kept for future reference. If a paper trail is not available, one should be created using a bank statement or another existing source.

When your business or an auditing firm needs clarification on a transaction, make sure that you have marked a visible trail that will justify your companies’ position on the matter. This will also give you more information when making crucial financial decisions. Information gives you a solid understanding of where you are, which in turn helps you know where you want to go.

LEAVE A TRAIL!