Bookkeeping is the process of recording your company’s financial transactions – inflows and outflows, in an organized manner. It’s like keeping a diary of your daily financial activities.
Besides the fact that as a company (particularly a public company), you are required by law to keep specific books and records of accounts, bookkeeping will save you from blindly driving your business.
Here are 5 reasons why you should take bookkeeping seriously in your business.
1. Improve your cashflow management
Liquidity level is very important in every business. It makes no sense for your business to be in high profits but have comparably little cash for its daily operations.
The other extreme end of this is, having too much cash available rather than in investments that would protect your money’s value from rising inflation.
Paying attention to the importance of bookkeeping can help you mitigate against these problems through properly maintained accounting records.
2. Create accurate financial records
Bookkeeping helps you know how and what you spend your business’ income on. By identifying and classifying your transactions appropriately, you will have a better overview of your business’ financial performance.
For example, recording payments made to payroll and expenses, credit sales made as receivables, etc.
3. Budget Accurately
Accurate bookkeeping makes it so much easier to budget accurately. With your income and expenses properly organized, it’s simple to review your financial resources and costs.
Financial statements can help you gauge your performance so you can take informed decisions about the future of your business. Bookkeeping therefore creates a financial roadmap for your business to grow.
4. Decision Making
By analyzing the information gathered via bookkeeping, you as a business owner can evaluate and take key decisions regarding your business.
Some of such decisions include; resolving if it’s the right time to apply for a loan and how much loan to be applied for, value of hiring an employee, option of expanding the business or halting operations, etc.
5. Getting investors
To make a convincing pitch to potential investors, proper accounting records (including your statement of profit or loss, statement of financial position and cashflows) are often demanded.
In addition to giving investors a glimpse of your business’ overall performance, providing your financial records will suggest to potential and existing investors that you are accountable with your business’ finances.
How to Implement Bookkeeping into Your Business
Now that you have leant a few reasons why maintaining financial records for your business is crucial, you need to act fast if you don’t already have an existing book keeping system.
One easy way is to hire the service of a professional accountant who is knowledgeable about proper bookkeeping and accounting principles. At Ruleborn Integrated Services, we can help you achieve your business’ strategic goals when you contact us today.