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5 Major Advantages of Updating Your Accounting Records

Giulia / November 25, 2019 / Accounting, Business,

In our previous articles, we have talked about how outsourcing accounting services can be beneficial to businesses irrespective of their size. Today, let us take a step back to square one and discuss why it is necessary to have updated accounting records in the first place.

Account bookkeeping does not come under core business processes. As a result, it is often overlooked or completed in a hasty manner, especially when it comes to small companies. If you are running a business, you need to take significant decisions related to inventory, product purchases and customer experience on a daily basis. Without a proper, in-depth analysis of your financial accounts, any decision you take on these lines will never be accurate.

Needless to say, important investments or customer promises made without a thorough knowledge of your finances can be catastrophic to the health of your business. Yes, maintaining your accounts and your business’s growth is directly proportional!

When you keep your records updated, these are the 5 advantages that will automatically boost your business.

Greater visibility and clear knowledge about your financial situation:

Your primary company accounting required you to maintain three financial statements – the balance sheet, your income, and your cash flow statement.
● Maintaining your balance sheet gives you a clear idea of your assets and liabilities.
● The income statements record your profits and losses, thus allowing you to analyze your business’s overall profitability or the lack of it.
● The last of these account bookkeeping tasks helps convert you accumulated benefits and other payments into a cash statement to get a fair idea into the total amount of cash flowing in and out of your business.
When these basic financial records are updated over a fixed period of time, they can together give you enough visibility to make informed business decisions.

Helps to cut underperforming services or unmoving products from your business:

When you update your financial statements on a monthly basis, you can carefully understand and distinguish between the products or services that are bringing in more profits and the ones that are gathering dust.

Accounting services provided by experts make sure that you get a product-by-product analysis. This will help you to efficiently identify the tasks that are more time-consuming and expensive. This way, you can take better decisions about which services to outsource, the number of employees to hire or which products you should stop selling.

Prepares you for the tax season:

If none of the above benefits are enough reason for you, here is the most crucial one – taxes! In most countries, businesses have to file tax returns on a quarterly basis which can become a hefty task if exact records are not maintained over time. Nobody wants to go through the hassle of rushing through all financial transactions just days before the deadline.

It is always advisable to keep your books ready on a timely basis. Or if you choose to partner with accounting companies that provide bookkeeping and accounting services, they can be a huge help too. Such firms store your financial information, prepare accurate statements and file your taxes, keeping in mind all compliance regulations.

Enhances business reputation during audits and when you are looking to raise funds:

Updated accounting books will always show your business in a good light. When the time comes for you to seek funds, grants or convince stakeholders to invest more in your company, you need to show them proof of your business’s finances. Most often, they also ask for audit assurances, in which case, you have to prepare statements for auditors.

If you do not keep timely records of your finances, suddenly having to come up with accurate data is next to impossible. Accounting services make it possible for you to present neat financial statements that will surely add an edge to your business identity.

Detailed insights help you increase your revenue over time:

Your carefully maintained accounting books can significantly help you increase your revenue in several ways.
● You can track your deductible expenses when you file your tax returns
● Helps to properly identify your income sources. You can rightly differentiate between your high-paying clients who make their payments on time from the ones who take up most of your time but do not add much to your revenue.
● With no metrics, you can never find out which aspects of your business are beneficial to you and what is draining your accounts.

With all these points in mind, it is clear that the timely maintenance of your financial records is very advantageous for your business. But as discussed, most of the time this aspect of your work gets overlooked because of the myriads of other core functions that you have to perform on a daily basis. This is why most businesses now are moving towards outsourcing accounting services to help maintain accuracy, efficiency and keep up with their taxes and audits.

Still wondering how to go about maintaining your financial records? Read our blog – Why you should outsource your accounting, even if you’re not a multinational (yet)

Bookkeeping and accounting services offered by PikoHANA has been carefully crafted in accordance with the back-office needs of businesses. So while you are busy performing core business tasks, PikoHANA takes care of your financial statements, prepares you for tax filing while simultaneously handling employee payments and other invoices. Experts in charge of accounting services at PikoHANA use state-of-the-art accounting software to make sure that you get the best ROI.

To conclude, account bookkeeping can clearly become the backbone of any company, big or small. Maintaining accurate track of finances requires a steady and keen eye for detail which makes it necessary for businesses to hire an accountant or outsource accounting services in order to keep up with daily transactions and invoices. Once you get your finances in order, it directly contributes to the growth of your business. Are you doing enough to ensure that?

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