There is no denying that if you want to run your business smoothly and grow it successfully, you need to have an in-depth understanding of the financial aspect of your business.
I learned the importance of always being aware of the finances of my business when I was running my bookshop chain, Archway Books, across Northern England. It didn’t take too much time as I only needed to calculate the cash and add it to the spreadsheets.
However, this simple exercise always helped me know how my shops were doing in terms of sales. With this data, I could always see at a glance how business is doing over the previous year, month or week. It also helped in managing the cash flow and taking my business forward. In addition to taking care of the business finances, I also made sure that all the invoices go out on time and late payments are recovered before more books are supplied. All these steps along with accurate bank reconciliation made the business of running bookshops a success.
I like to work with numbers, which means bookkeeping was not that hard for me. However, most people are not like me. If you’ve set up your own business, your focus, probably, was likely to be on other things, and keeping accurate financial records was not that high a priority.
The Importance of Accurate Financial Records
A business has many different aspects and everything needs to work smoothly in order to successfully run an expanding business. You should not avoid any of these aspects such as technology, customer relations, marketing and sales among others. Good bookkeeping is also an essential aspect of running a successful business.
You can spend time learning everything that is important to know about effective bookkeeping but it will take some time. You also have the option of outsourcing it to a specialist, such as Bould Bookkeeping. Whenever you outsource any part of your business including bookkeeping, don’t just think of the cost of outsourcing it. You also need to focus on the value it brings to your business.
Here is you what you get when you outsource bookkeeping to an expert:
- You get peace of mind.
- It allows you to have more time which can be spent on doing what you like to do.
- It ensures that all the deadlines are met.
- You know someone is there to keep an eye on the business finances.
Automation has also become an integral part of bookkeeping in recent years and these days, extensive reports are available which allow you to have a better understanding of the financial aspect of your business. However, having access to reports and understanding those are two different things. You need to be aware of the differences between Statement of Financial Position, Profit and Loss Report as well as Balance Sheet. You also need to understand how asset depreciation works. In short, these reports contain a whole lot of financial terms and it can be daunting to understand everything.
However, when you are always aware of the finances of your business, you will make sure that your accounting submissions are never late, and up-to-date accounts also allow you to maintain your cash flow. The cash flow aspect is really important and my experience tells me that not many businesses take it seriously. In fact, many businesses get it done only once a year.
However, you need to make sure that your finances are always up-to-date by getting it done at a more regular frequency. You can do it on your own or get it done by your bookkeeper. When you know your accounts, it will allow you to make sure that you are always aware of the key indicators about the health of your business including profit margins, net as well as gross margins, expected turnover and other such things. It will allow you to plan your cash flow much better.
Here are the various benefits of bookkeeping:
- Detailed financial records. A dedicated bookkeeper will make sure the financial records are always kept up to date.
- It ensures that you are always in compliance with the law.
- Makes planning easy.
- Instant reporting.
- Tax prediction gets better.
- Helps in maintaining relations with investors and banks.
- Business responses get faster.
- Financial analysis gets faster and it helps in keeping the cost of accounting down.
- Audits become easier as detailed balance sheets are available which can be compared with the statements.