Most microfinance institutions turn to automation to solve their bookkeeping system problems. However, most software providers do not have enough background in microfinance, therefore, software designs are not attuned to the needs of microfinance institutions. Off the shelf software, on the other hand, do not have the required flexibility to adapt to policy and changes in operations. The color-coded bookkeeping system is an alternative bookkeeping system specifically designed for microfinance institutions. The system, once installed and diligently applied, will enable microfinance institutions produce aging of loans on a daily basis; strengthen internal controls; and measure the performance of loan officers, branches and the institution as a whole. The scheme follows a color-coded technique that guides management in crafting required reports that are necessary in making well-informed decisions.