Importance Of Business Bookkeeping
Business bookkeeping refers to the process of tracking every financial transaction that has been done or is to be done within the company with the intention of ensuring that you know what financial state the company is in at a particular time. Some of the details that can be captured when bookkeeping include the money that was invested in a business in the beginning of a financial year, the amount that is used to market the final goods produced, the amount made from selling the goods, the amount that is to be spent on salaries of workers and finally the amount of money made in terms of profits. There are a lot of advantages of bookkeeping in a small business company as long as it is done in the right way and all the information can be verified.
The first important fact is that bookkeeping allows you to identify the people whom you have served or sold goods to and are yet to pay you by creating a special Accounts Receivable which reflects a list of all your customers who are yet to pay and how much they owe you. Having such an account is good because you will be able to establish exactly how much money you should expect and by what time you are to be paid so that you can regularly remind the clients who owe you the money to make the payments in time to allow your other operations to run smoothly.
The second benefit is that bookkeeping also allows you to keep an inventory which includes the products that have been manufactured and are yet to be sold because they can be accounted for as money that is yet to be received by indicating their exact prices. The inventory details are used to establish the possibility of making money from the goods that are yet to sell depending on the market trends and how likely they are to be bought whereby you can also plan for the money that can be made.
The third important thing that results from strict bookkeeping in a firm is that you have a clear record of individuals whom you are supposed to pay money for what they sold you and maybe you were in a difficult situation so you agreed to pay later. The good thing about such records is that you will have a clear budget on how to settle the small debts without having to go through any problems and it can also help you to develop a loan-repayment strategy.
The last thing is that bookkeeping enables you to know how much money your company is generating from selling the products being manufactured. Keeping track of sales helps to calculate other things including the profits or losses incurred by the business.