Why Accurate Financials are Important to Businesses Today
Businesses can only survive if they cash in more money than they cash out. Accurate financials allow businesses to know whether or not that’s happening and a lot of other essential business information.
A lot of the information contained in financial statements needs to conform to certain accounting standards and tax laws.
Let’s analyze some key reasons why accurate financials are important.
Smoothens business processes: Well-kept records allow enterprises to manage their accounts in a more professional way. Accurate records enable businesses to know what they owe their suppliers (payables) at any given time, and the expected income (receivables) so as to schedule payments on a timely basis.
Helps evaluate business performance: Good accounting practices grant business owners and management a true picture of how the business is performing. Proper financial records enable business owners to assess the performance of their enterprises from one period to the other and as a result, they can determine whether they are on the right track or there’s need for adjustments.
Saves the business money: Maintaining proper accounting records reduces the workload for your accountant or bookkeeper, and that means that a business gets to part with lesser consultancy fees for accountants and bookkeepers.
Provides answers to key business questions: Correct business information can help companies to answer key questions regarding their operations including: What are their best selling prices for products? What profit margins are they operating on at a certain selling price? How sustainable is the business in a certain market? Without proper records, the answers to these important questions could remain a mystery.
Provides investors with a clear picture of the business: Accurate information keeping practices resonate well with investors and lenders. A business worth their time and money must definitely be one that has well-kept records. Financial information such as accurate balance sheets, income statements, and statements of Cash flows are some of the vital documents investors and lenders look out for when considering investing their money in a company.
Makes it easy to pay the right amount of taxes: Proper accounting records ensure businesses to pay the right amount of taxes and on Tax-related issues have brought down many businesses; this is an area you want to keep as clean as it should be.
If you’ve made a career in business, you’ll need to understand the importance of having accurate financial information. As you can see, accurate records are a vital component of any business.
We at Profit Matters understand too well the need for proper financials having been in operation for 10 years. And if maintaining accurate records seems like a daunting task to you, don’t worry; drop us an inquiry today and we’ll come and do the heavy lifting for you so you can concentrate on what really matters; serving your clients.