Viral.com.au
viral.com.au

  • Written by Len Mendoza

Keeping business records helps companies in making better decisions and developing applicable strategies resulting in increased competence and efficiency.

Record keeping is a process that most institutions cannot disregard - be it in the private or public sector. But what is record keeping and why is it important?

What is Record Keeping

Record keeping is the process of documenting transactions and events in an accounting system. Since the fundamentals of accounting rely on detailed and complete records, record keeping is one of the basic foundations of accounting.

Importance of Record Keeping

So why is record keeping important and how records help to facilitate better business decisions?

1. Fraud or theft prevention

Having a fraud or theft elimination process by keeping detailed records of your business overhead and activities is essential for your company - be it as a bootstrap, small and medium enterprise (SME) or large enterprise. Having a summary of your business cash flow can allow you to comprehend how much funds are coming in and out of your business and bring about an accurate balance sheet for accounting and investigation purposes.

2. Pay your taxes

With documentation and good booking practices, you can pay your taxes correctly, promptly, and save on fines and damages.

As a startup or SME business owner, every penny counts and it is important to stay prudent on such financial matters.

3. Comply with laws

Good booking practices are necessary because it aids companies to adhere to different laws in different countries. Businesses should establish good bookkeeping and cost control systems to drive good booking practices and retrieve or document records easily.

Progressively, bookkeeping and cost control systems have collaborated or conspired with each other to ensure flawless data simultaneously and come up with bookkeeping-friendly solutions that are economical and convenient for rookies and SMEs.

4. Manage your cash flow

Cash is king when it comes to the financial administration of a growing company. As apparently depicted through COVID-19, maintaining strong resources that can sustain against pandemics and other unexpected happenings is very important if you want your business to make it through in the long run.

This is where record keeping comes in. It helps you to analyze and realize where your cash are coming in and going out from and have a precise forecast of the health of your company’s finances.

5. Make business decisions

Every penny within a rookies and SME is very valuable and should be profitable. Knowing where your pennies are coming from and going to is crucial in helping you be aware and make data-driven business decisions.

Expense management software is a digital cloud solution that can help you break down your business expenses and retrieve insights on your business spending. As a startup or SME owner, you would want to save as much time and money as possible and focus on other important business tasks to drive profitability and growth.

6. Save time and costs

When you need to file reports and conduct financial year end closing, a good record keeping system can allow you to save time and money as you do not have to panic and go through a last-minute rush to meet deadlines or hire someone last minute to handle it.

Digitizing your documents can reduce the hassle and ensure you stay compliant with regulations and deadlines. By putting your documents and records online, you can increase operational efficiency, reduce transportation and storage costs, search records faster and easily access records from multiple digital devices.

Otherwise, you can also consider hiring a corporate secretary. It is possible for startups and SMEs to do so as there are affordable corporate secretary services available in the market that can be less expensive than hiring an additional headcount!

7. Prevent loopholes and oversight

Record keeping can help to justify and explain why the company management made certain decisions. Cash flow problems are also found to be one of the leading causes of failure for businesses and having consolidating records will enable businesses to make better decisions. With your business survival at stake, the possibility of having loopholes and oversight cannot be ignored by business owners and precautions should be taken.

Record Keeping Requirements

Different countries have different regulations depending on the local laws stipulated by the government. It is important for you to do substantive research and ensure that your company’s current record keeping system is compliant with the country's regulatory requirements.

Ways to Maintain Good Record Keeping

Now that we have understood the importance of record keeping, how can startups and SMEs instill an efficient and compliant booking system?

Organize your data

Data should be well-arranged and specific and clear explanations should be given such that employees have a clear understanding on how they can process company records. For example, charges can be labelled upon submission such that the total charges across the entire company can be consolidated and filed into individual categories.

Outsource the work

Startups and SMEs have a small headcount and the existing staff may not have the knowledge, proficiency or bandwidth to perform bookkeeping tasks promptly and precisely. Outsourcing is a good way to get work done professionally and at an affordable cost.

Focus on what you are good at and outsource the rest. Not good at accounting and bookkeeping? Bring in someone to do it instead. Use your time and energy carefully by focusing on business activities that can help you drive productivity and profitability better.

No use spending hours trying to figure out how to process your records when you can easily hire someone to do it professionally at a fraction of the cost.