Keeping Financial Records

2 years ago
Financial records

It’s probably not at the forefront of your mind but do you know that keeping good financial records can help your business? Keeping accurate records is not only a legal requirement but can also be used as an insight into the financial health of any company. Many may associate the idea of keeping records with endless bureaucracy but this could not be further from the truth. The data generated by keeping records is a vital strategic asset.

Financial transparency

Imagine the following scenario. A start-up is looking to attract investors. They have not only to sell the idea but the company as well. No investor would even look at the opportunity without consulting the figures and researching the company beforehand. After all, before any investment it is essential to assess the financial situation of the target company.

Elaine Clark, managing director of CheapAccounting.co.uk, says that accurate financial records provide an overall picture of the financial health of the company. For example, says Clark, is the company reliant on too few customers? Or, is it time to expand? Shouldn’t these risks be mitigated? (Click here to read Elaine Clark’s full article).

Good beginnings

But perhaps we should retrace our steps and return to the very beginning of the process. In this day and age there really is no excuse for poor financial records. Any entrepreneur knows that there are many online accounting systems. It is only a matter of choosing the right system for the company. This means that it is important to consider which system to pick even before you start trading. Starting a company means costs that ultimately will help to reduce the tax bill. And then there’s also VAT and invoice reconciliation.

Let’s consider the example of Jon Petrie, founder of music store DS Music. He had no experience in bookkeeping, or of business whatsoever, when he started his music store company in 2004. One of his mistakes was to issue VAT invoices without being VAT-registered. Online accounting, says Petrie, was always a part of the company.

However, according to Petrie, after some initial hiccups with a different system, the company is now using Sage One Payroll. ‘Now we’re using a simpler payroll system (Sage One) and don’t have to call the tech support lines at all,’ Petrie says. (Click here to read the full article).

Systems that grow

Cloud-based online systems also offer the extra convenience of multiplatform access. Even when not in the office, the accounts and other financial records remain accessible via a smartphone, a tablet or laptop with an Internet connection. Sage One provides the added advantage of bank reconciliation. This means that any monies received as payments from clients will be automatic reconciled with the invoices issued. This in turn will free up time to concentrate in the business.

Sage One also offers the added benefit of payroll. Automation is the key element. Systems that grow as your business grows.