“Accounting is the language of business.”
– Warren Buffett, American Business Magnate
According to a report published by the Small Business Association, it has been found that 30% of new businesses fail during the first 2 years of their operation, 50% in the first 5 years and about 66% in the first 10 years? Now, I won’t be surprised if one of the contributing factors behind such failures is poor maintenance of the book of finance, wrong choice of finance management, lack of market research and the likes.
If we are to talk about the importance of maintaining an updated book of accounts, it is to be noted that no business can run successfully, unless the entrepreneur is keeping up with the bookkeeping and accounting records, and updating the same from time to time.
It would eventually crash down. The primary reason why accounting records and bookkeeping are important for every business house is because of the fact that it helps the directors of the company to take all critical decisions confidently.
An updated book of accounts reflects the present scenario of a firm and also tells about the financial status of the trade in progress. Hang on, there’s more to it. Here are the eight major advantages of updating your bookkeeping and accounting records. Take a look for a better insight.
Makes the process of financial report sharing much easier
Entrepreneurs are required to share financial reports from time to time with the stakeholders and investors of the company.
Updating the book of accounts and maintaining an updated report will help the executives of the firm to share a concise and explanative book of records without hassle or confusion.
Helps business houses keep up with the law
It goes without saying that every entrepreneur has to face and deal with the auditors, and abide by corporate amendment. In case you are lagging behind in terms of a timely update of your accounting and bookkeeping records, then you might end up facing a tough time dealing with the auditing officers.
On the other hand, an updated record will always help you to present your firm as a legally disciplined and honest entity.
Improves and ensure a proper flow of cash
Managing proper cash flow is perhaps one of the most important aspects to consider when it comes to maintaining a seamless business transaction. In case you are not updating the book of financial records of your firm, you might land in big trouble in the near future.
An appropriate and updated book of accounts will help you in keeping up with all invoices, cash flows, supplies, and the likes.
Helps you scale up revenues in a smoother way
“My mantra to improve revenue generation is simple. Keep updating your financial records at regular intervals, and watch your revenue graph climbing the stairs of success”
– Mark Evans, Financial Advisor, MyAssignmenthelp
True that! A well-maintained book of records will certainly help you in generating maximum revenue without being subjected to any hassle or major hindrance. There are various contributing sources of income when it comes to revenue generation of any particular trade.
For example, direct sales are not the only source of income for a B2B business. Other factors and sources such as new business lines, share gain, base retention, and marketing positioning is also associated with it.
Maintaining a concise record of all cash flows and updating bookkeeping records from time to time will help the entrepreneur take a close look at each of the sources of revenue and identify the weak areas in the long run. As a result, you can get introduced to the bigger picture, take note of all shortcomings and improve those areas for an improved revenue generation.
Saves you from the wrath of tax accounting complications
It is a known fact that taxation is one requisite aspect, necessary for every business, small or big. Maintain an updated record that could save your time and energy during taxation. This way, you would not face a hard time dealing with all unaccounted transactions and invoices during the time of tax payment.
There are different business models with various tax rules. From an annual payment of tax to quarterly payments, there are a lot of regulations associated with the process. If you could simply put an effort to come up with a properly maintained and upgraded bookkeeping and accounting records, then it is you who are going to reap the fruit of labor in the long run.
You can monitor and trace all important transactions easily
In case you are having a tough time tracing out a couple of unaccounted transactions and orders placed by your clients, then what would you do? You might just end up losing your cool, feel panicky and spend endless hours of struggle with your accountant.
But the question is, why would you like to suffer and take the pain of a last-moment follow-up, that too in haste? A nicely maintained, organized and updated book of accounts can simply help you find out all missing orders, information and transaction details seamlessly.
Makes it much easier for you to get bank loans approved
There are high chances that banks would like to take a look at your financial status before sanctioning a loan. In case there’s a need for you to seek bank loans on behalf of your company, make sure you have an updated bookkeeping and accounting records.
This would help you maintain an image of transparency, honesty, and sincerity before the bank officials. On the other hand, leaving your book of accounts unattended and ignoring the process of a timely updating might disappoint the loan officers and could even violate certain regulations drafted by different banks.
Helps you with proper payroll monitoring
This is yet another notable benefit of maintaining an updated book of accounts. For companies that offer yearly bonuses, commissions, net revenue percentages, and the likes, maintaining an accurate payroll period is perhaps one of the most important aspects.
With a properly maintained bookkeeping and accounting records, one can ensure keeping track of all payroll entries of the employees associated with the organization. This, as a result, will help employers to keep the employees satisfied with a well-defined salary structure and payroll system, without causing confusion.
Now that you know about all the prospective benefits and major perks of maintaining an updated bookkeeping and accounting record, you should gather all important documents without delay. Take some time out to sit with your accountant and sort things out with careful evaluation of all entries made in the book, along with a close assessment of all missing invoices that need to be retrieved and updated in the records for a smooth business operation.