Why Effective Bookkeeping is Essential to Business Vitality
Bookkeeping is not usually the first on a business owner’s list of things they enjoy about running a company. However, it is one of the most essential tasks necessary for its success. Bookkeeping entails recording all the financial transactions and monetary events that occur. Although most will admit the importance of an effective process, it’s often one of the lower priorities owners and management focus on. Although the demands of employees, customers, production and sales are certainly essential, without effective accounting and bookkeeping, issues will quickly arise. To help clients, prospects and others understand the importance of an effective bookkeeping process, Wilson Lewis has provided a summary of key areas impacted in the process below.
- Cash Flow Management – Accurate bookkeeping records are needed to analyze the overall financial state of a business. Without up-to-date records, management is not be able to understand how much profit was earned or losses incurred. These records also provide insight into whether a company is growing, stagnant or declining. This information is essential in evaluating the overall business as well as its potential to meet financial goals. When management has a firm grasp on business performance, they are able to strategize and make appropriate adjustments as needed.
- Day-to-Day Management – Recording day-to-day financial details will help keep track of vital data needed to run multiple areas of the business. For instance, a quick glance at a report from a well-run bookkeeping process will reveal how much money is owed and from which customers – along with any overdue accounts. Management will also be able to keep up on business expenses and deadlines for things such as loan payments, rent, taxes and standard monthly bills. This can save or reduce costly fees and other penalties.
- Guide Financial Decisions – Having access to proper bookkeeping data helps the business plan ahead and make financial decisions with clarity and perspective. Forecasting business needs ahead of time and planning for purchases and other miscellaneous business expenses will become easier with the right financial information. Management will have access to the data needed to set projections, budgets and goals for the business, make necessary short- or long-term adjustments – such as increasing the price of certain products or services or cutting expenses to offset a lack of profit in a particular business niche, put more resources and effort into a growing service, or plan for an additional hire.
While most business owners understand the importance of proper accounting and bookkeeping, it’s easy to allow it to go on the back burner. There is no substitute for an effective, timely and efficient accounting process. For most this means that outsourced accounting is the best bet to keep the process running smoothly with dedicated expertise. If you are interested in learning more about our outsourced accounting/bookkeeping services, then Wilson Lewis wants to help! For additional information, please call us at 770-476-1004, or click here to contact us. We look forward to speaking with you soon.