Why Is It Necessary For Business Organisation To Collect,file And Maintain Accurate Financial Records?


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James Kent Profile
James Kent answered
It is crucial for any business organisation to collect, file and maintain accurate financial records. Without the correct financial details in order a business would be working blind and therefore could not suitably deal with future plans and orders if they do not know actually how much is needed to keep the business running appropriately.

A lack of updated and in-depth financial records are said to be one of the fundamental factors of why many small businesses fail. A recent survey of accounting firms reported over 50% of the accountants surveyed rated their small business clients accounting records as average, inadequate or non-existent.

There are some very important reasons why it is vital for a business to keep their financial records up to date. Firstly it will enable them to understand their tax position also it is crucial in being able to track who owes money to the business and when and where money goes on a day-by-day and week-by-week basis.

Also if a business wishes to extend financial records to include a cash flow projection, they will then also understand the need for cash in the weeks and months ahead. Unfortunately accounting and business record keeping can often be treated by small business owners as something they do only because they have to, especially as it takes up time. This mindset is not surprising when you consider the many time demands facing the small business owner today.

However, the time is worth spending on keeping accurate, timely and up-to-date financial records as a matter of normal business process when you consider how financial visibility aids in the success of many businesses.

If the small business owner is time poor, it would be worthwhile them employing a professional bookkeeper to look after their financial records and keep the books up to date, allowing the owner to keep the business on track and moving forward.
Arthur Wright Profile
Arthur Wright answered
To detect cash flow problems and possible criminal activity and find out where losses are and for IRS purposes

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