The Importance of Timely Bookkeeping
Making revenue isn’t enough. For sound financial health, it’s essential that companies are wary of where the money is coming from and where it’s going. This only happens if you update the books when transactions take place. Here’s why this is imperative:
It helps you stick to a budget
We are still living amid a pandemic, which means things are still a little tough, and businesses need to manage their expenses well. No matter which stage of the business cycle you’re in, it always helps to stay on top of your expenses. You can’t have a budget if you don’t have a realistic idea of what you spent last year. Most budgets fail if you haven’t kept a check on your monthly expenses. With regular bookkeeping, you can make changes in your budget on the go and keep track of your expenses against the budget.
Let’s say your company needs to buy an industrial printer and you need to know whether you have the funds. If your financial statements are updated, you can take a single look at the retained earnings and tell whether you can afford to make the purchase or not.
Businesses need to take very well-informed, well-calculated, and practical decisions. There are a lot of planning, analysis, and feasibility calculations that go into every decision a company makes. Before buying a new product, the management accounting team needs to weigh and compare the costs and benefits of making the product in-house or outsourcing production. For this, you need access to the latest production costs, sales figures, and the company’s outsourcing budget.
If your accounting books aren’t updated, any form of inaccurate information can lead to costly decision-making mistakes.
Easier to qualify for funds
Whenever you approach a potential investor or lender for funds, your financial statements are the first thing they want to look at. This helps them judge your company’s financial health and decide whether their investment will pay off in the long run. It’s proof of the kind of money that your business makes. The more updated, well-defined, and accurate the financial statements are, the higher are your chances of qualifying for the funds.
An accountant can generate reliable financial records for you—so long as you provide them with up-to-date books. Then, a lender can use your financial statements to figure out whether or not your business is financially healthy and whether they should lend you money.
Are you having trouble updating your books? Faber LLP will be glad to help! Get in touch for timely bookkeeping and accounting services in Edmonton.