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Benefits of business records

ArticleID 94  
Writer Isaac Thuku
Category Personal Article

Record keeping is the process of maintaining business documents so that they can be accessed quickly and easily. Business records are all the documents which show the daily transactions and progress of the business. Commonly known records include receipts, vouchers, invoices, cash flow reports, bank statements and cheque books among many more.

Business records help the entrepreneur in monitoring the growth of the business. He can know which department is making profits or losses and determine what measures to undertake. This will help in budgeting and allocating capital in the business enterprise.

Keeping business records can help the entrepreneur analyze the strengths and weakness of the business through the SWOT analysis. By doing a follow up of the records, strengths will be identified and acknowledged while the weaknesses will be turned to strength. Opportunities will be grabbed and threats will be avoided.

Record keeping aides in identifying deductible expenses. The entrepreneur will know the debts to be settled and the ultimatum which should be observed. Allocating funds to different departments will work efficiently by referring to the business records. The records will show how much the business owes the bank and investors. Debts and balance from the previous months should be clearly stated to assist in future budgeting. Preparing financial statements which includes profits and loses becomes easier.

An entrepreneur who keeps records will have full control of the business. Entrepreneurs need to feel empowered and in control. A business which keeps records gives the entrepreneur a fair run in management. The records act as a guide to the entrepreneur.

Business records help the entrepreneur in managing changes in a business. The business may need to change the location, the name, the activities and even the management. Executives often refer to previous records which indicate how the business is running. From here changes in the business can be made according to how accurate the records are.

Enterprises with well written, kept and accurate records stand a chance of getting business loans. Banks need to see the credibility of a business through the records provided. When applying for a business loan, an entrepreneur will be asked to provide a bank statement and some receipts which are a proof of saving regularly. Banks will always be reluctant in giving loans to businesses with no or poorly written and kept records.

Records assist entrepreneurs in preparing for the business tax returns. Businesses which do not pay their taxes are operating illegally according to the laws of almost every country. They stand a chance of being shut down by the government and the entrepreneurs can end up in jail. Also records prevent businesses from losing their licenses in case of a scandal. The records show the genuineness and authenticity of a business. Receipts will show where, how and to whom the payment was made or received.

The performance of a business is clearly stipulated in the records. Well outlined records elevate the business in attaining maximum profits. Poorly kept records will do the business more harm by driving away investors. Technology has made record keeping easier, faster and more secure. Business records should be kept safe and private.

Benefits of business records
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