Business fails to keep records

ABOUT 17 per cent of WA small businesses are not keeping proper records, a twelve month Australian Securities and Investments Com-mission program has found.

ASIC WA enforcement director Stephen Howell said this figure was unacceptably high.

“In a minority of cases, primary records, including debtor and creditor lists, were not kept properly while in others they were not kept in a way that allowed meaningful financial information to be extracted,” Mr Howell said.

“Companies not keeping books and records to an adequate stand-ard also appeared to have diffi-culties paying their debts on time.

“Of these, the majority ceased to trade rather than incur credit. How-ever, a minority were still trading. Those companies were warned of possible consequences and some are still subject to surveillance.”

The ASIC ran the campaign to not only find if, and to what extent, there was a problem, but also to show companies the benefits of maintaining good financial records.

Mr Howell said frank discussions were held with many directors of small companies and often their accountants as well.

“This is important because company directors who continue to trade when there are grounds to suspect the company cannot pay its debts when they fall due may become personally liable,” Mr Howell said.

“The surveillance results also highlight the need for companies to have effective credit control systems.

“This is so they do not continue to give credit to the minority of operators who through neglect or design cannot pay their debts and restrict potentially damaging losses to manageable levels,” he said.

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