Incomplete records: the money really was spent, but there is no document. Now what?

Hook

Boss, this lesson answers a question almost every business owner has asked: "I really did spend this money, but I have no document — can it go into the accounts?" Some people will tell you "no, no document means no claim". Others will tell you "never mind, just write one out". Both are wrong. The correct answer is one line: no document does not mean no evidence. But — you can make good on evidence, and you cannot make good on honesty. Today we draw that line clearly.

First separate the three kinds of "no document"

"No document" is really three situations, and they are handled completely differently. First: there was a document and you lost it. The shop issued it and you did not keep it, or the thermal paper faded (the fifth lesson). This one is the easiest: go back for a copy, or make it good with the payment record from the time. Second: that trade simply does not issue documents. Vegetables, fish and meat at the market; casual labour and temporary help; small roadside amounts. This one relies on an internal voucher, which we come to shortly. Third: the other side refuses to issue one. You ask for a document and they say "a document costs extra", or simply will not give one. This is not an accounting problem, it is a purchasing problem. It usually means they have not declared it on their side, and if you post it into your accounts, the risk travels with you. The first two can be made good; the third is about your purchasing decision, not your books.

No document, so what do you need instead?

So for the second situation, where the trade does not issue documents, what stands in? The answer: raise an internal voucher yourself and pair it with an external trace. The internal piece, which we call a voucher, needs five things on it: the date, what was bought, how much, who received it, and who approved it. The last two are the crux. Without them the paper has no force. Then pair it with external traces, the more the better: a transfer record showing the money left the account; a delivery or goods-received record showing it actually arrived; a photograph — the vegetables at the market, the materials on site; and a signature from whoever took the money. The thirty-first lesson's three questions: did it happen, did it arrive, did the money move? Some practical examples. A restaurant buying at the market — one purchase note a day, listing items and amounts, signed by whoever bought, approved by the boss, and an entry in the cash book the same day. Doing it daily is what makes it convincing; doing it at year end is obvious at a glance. Foreign workers' wages — you need a payroll list with each person signing for receipt, and a bank transfer wherever possible. If it is paid in cash, the signature sheet must be kept. Wages also carry statutory obligations, which depend on your circumstances and the rules of the year. A pile of small receipts of a few ringgit each — do not key them one at a time. Use petty cash: set a float, top it up when it runs out, post it in one go, and staple the documents together (the scanning from the twenty-fourth lesson).

The more serious side: income with no document

Everything so far has been expenses with no document. Now the more serious one: income with no document. This is extremely common — the soya milk seller, the cooked food stall, cash retail, the night market pitch. The purchase documents are complete and there is no record at all of what was sold. The boss will say, "the customer does not want a receipt." True, the customer does not. But you do. Because if you have purchases and no sales, the books show a permanent loss. When LHDN sees that, the first reaction is not "this business is struggling", it is "they have not declared everything" — and then they look at you on an estimated basis (the forty-third lesson on estimates: if you do not supply the figures, somebody else will estimate them for you). What to do? It is simple: close off once a day. With a cash register, take a daily Z reading. Without one, keep a daily sales book: how much cash today, how much card, how much e-wallet. Then bank it the same day. That banking step is the crucial one, because the bank statement is external evidence (the twenty-seventh lesson) and it testifies for your sales. Cash left in a drawer can never prove itself.

Paying out of the cash drawer: the messiest habit

Now the habit that does most to scramble a set of books: taking cash straight out of the drawer to pay for things. Materials, casual labour, petrol, even the boss taking some for himself. The result: the sales are not fully recorded, the expenses are not fully recorded, and the stretch in between nobody can explain. There is only one correct approach: what comes in goes in, what goes out goes out. Today's cash takings are recorded as sales in full and banked in full; payments come out of petty cash or the bank. Troublesome? It is trouble once. Letting it get messy is trouble for a year (the thirtieth lesson). And a few common cases worth clearing up while we are here. Free-of-charge goods, FOC — the extra screws or the giveaway the supplier throws in: the purchase cost does not change, but the quantity has to go into stock, or the stock records will never tie (the ninth lesson). The boss taking goods for himself, or friends and family taking goods — that is not a sale, it is a withdrawal. It has to be recorded, or your cost of sales inflates for no visible reason (the third lesson on keeping company and personal apart). Staff purchases — that is a sale, just at a different price. Invoice it and post it as usual. The boss drawing foreign currency from the company — a money changer taking out some SGD, for instance: that is a withdrawal or an advance, and it needs recording, with a rate and a date. It is not "took it and that is that".

Red lines: do not touch these

Finally, the red lines. These are not solved by any bookkeeping technique. One, underground money channels and putting transactions through a money lender. "Just run this through for me" — as the forty-fifth lesson covered: the moment anything upstream goes wrong, the whole chain freezes, and a frozen account kills a business on the spot. The fee you saved does not buy back a frozen account. Two, goods shipped direct from overseas with no customs declaration at all. The money really was paid and the goods really arrived — but duty and import compliance are not something bookkeeping can make good. Record it honestly in the books, go and obtain whatever documents are due, and do not paper over it with a self-made invoice. Three, making a document yourself. This is the fatal one. Money genuinely spent with no document is an incomplete record — it can be explained and evidence can be assembled. Making a document is a different thing altogether, of a completely different character, and it usually leaves traces too. Remember the line: incomplete can be made good, false cannot be touched.

To close

In summary: "no document" comes in three kinds — lost it, the trade does not issue, and they refuse — and only the first two are accounting problems. With no document, use an internal voucher plus external traces: did it happen, did it arrive, did the money move? The income side matters more — close off daily and bank it the same day, because cash in the drawer cannot prove itself. What comes in goes in and what goes out goes out. And do not touch the three red lines. If your books are in exactly this state right now, there is no need to feel embarrassed — most businesses grew up this way. What matters is recording completely from today. Grab a coffee first and talk about your business. For the accounting, come to LTT. I am LTT, helping SME bosses get their accounts straight. Follow us, and see you next time.