CBAN: Why MSMEs Need Efficient Book-keeping

Members of the Credit Bureau Association of Nigeria (CBAN) have advised operators of micro, small and medium sized enterprises (MSMEs) in Nigeria to embrace efficient book-keeping in order to enhance access to finance as well as for them to expand their businesses.

The advice was given during the National Credit Reporting Conference, which was organised by the CBAN with the theme “Promoting MSMEs Credit Worthiness: Effective Bookkeeping and Loan Accessibility.”

The Managing Partner of Taisha Associates, Mr. J. Taiwo Popoola, who made the key presentation during the conference on the “ABC of Effective Bookkeeping for MSMEs,” said efficient bookkeeping could help enterprises to secure business loans, detect banking errors quickly, show were their money is going and ensure that they enjoyed favourable tax deductions.

Taiwo said: “Book-keeping can be tedious work, but the sweat equity buys you something priceless: financial insight into your business. Without bookkeeping, you’re driving blind like a car without a gas gauge.

“Sure, the car is driving fine, but who knows how long before you have to pull over and wait for a friend to bring a jerry can?

“Book-keeping is the process of tracking all of your company’s financial transactions, so you can see exactly where your business is spending money, where your revenue is coming from, and which tax deductions you’ll be able to claim.

“If you need financing of any kind, having well-kept books give lenders or investors a clear idea of your business’ current financial state, and allows them to make financial projections about your company’s ability to pay off its loan in the future.”

He also advised MSMEs to always separate their businesses from personal expenses, choose a book-keeping system and accounting method that are suitable, categorise their transactions, organise and store their documents and prepare potential deductions.

“Organising and storing your documents like invoices and vouchers are crucial because the only language the taxman understands is business documents. We need to emphasise this because most MSMEs ignore this vital area,” he said. In his contribution, the Chairman of CBAN and the Chief Executive Officer of the CRC Credit Bureau, Dr. Tunde Popoola, said the theme of this year’s conference was informed by the realisation that less than four per cent of more than 40 million SMEs in Nigeria have access to credit.