Updated and accurate bookkeeping is the backbone to keeping a business running smoothly. Whether a business owner is handling all of their bookkeeping in-house, or if an outsourced service provider is taking care of it, here are a few reasons why up-to-date bookkeeping is so important.
Setting plans and identifying opportunities that will keep the business operating and accelerating growth all fall into the budgeting process.
But the budgeting process does not have to be a painful one. Having accurate bookkeeping to base the budgeting numbers off of makes the process much easier. Additionally, budgets should be updated throughout the year, so keeping the books updated regularly will allow clear insight into the future.
Most budgets for businesses fail because they do not get updated with real spending numbers. When a business stays up-to-date, accurate numbers are available on the fly.
Every time a business spends money, it must be accounted for. Whether it is for airplane tickets to an event or a new printer for the office, it needs to be recorded in a timely manner.
Expenses are typically logged in a general ledger account specifically for expenses. When this step goes overlooked, it can cause bookkeeping issues. When expenses are skipped, it provides the illusion that money is available to spend, when it is not.
Knowing how much a business spends on a daily, monthly, and yearly basis is part of having up-to-date bookkeeping.
Revenue Forecasting Made Easy
Forecasting revenue may seem like a redundant task at times, but there are definitely times when an accurate forecast is needed. The best way to forecast revenue is by looking at the business's financial history, and the only way to forecast accurately is if the financial history is accurate as well.
A good example would be a seasonal business. Forecasting revenue on a month-to-month basis would be very important to plan for busy seasons and plan for the slow seasons. With revenue forecasting, a clear picture will be painted of how much money will be coming in to keep the company alive.
Growing Is Easier
Throughout a business's lifetime, there is a good chance that loans will be utilized for start-up, expansion, and more. In order to be successful in acquiring a loan, banks will need clear proof that there is money coming in and projections for a sustainable future.
The income statement, the balance sheet, and cash-flow statements are three key statements that show proof of how much money a business is bringing in and spending. These statements can be generated relatively easily to provide to a bank if the bookkeeping is up-to-date. Up-to-date books will give a bank reliable reassurance that they can lend a business the money needed to continue growing.
It All Starts At The Numbers
Businesses need money. Without money, there simply is no business. In order for a business to evaluate its healthy, financial reporting is a necessity and all financial reporting falls back on accurate numbers. Keeping the bookkeeping for a business up-to-date and accurate will make financial reporting a breeze.
To make things even easier? Consider implementing technology like QuickBooks or NetSuite, or even outsourcing the bookkeeping and accounting operations to save the hassle and save money!
AccountingDepartment.com is a full-charge, virtual, outsourced accounting service provider that provides client accounting services to small and medium-sized businesses all around the United States. If you are struggling to keep up with the daily tasks of bookkeeping, reach out to AccountingDepartment.com to see how we can assist!