Proper bookkeeping records management will drive your company to success. It gives the owners a transparent measure of their business’s performance. Bookkeeping provides information to make strategic decisions and a benchmark for revenue and income targets. All types of business entities depend on accurate bookkeeping records management for both internal and external users.
About 79% of accounting firms offer bookkeeping records management services to clients.
8 Common Challenges Faced in the Bookkeeping Records Industry
1. Cash Flow Problem: Without being able to monitor and manage cash flow constantly, a business will fail in auditing its inventory. This happens when there is no proper bookkeeping record management in place.
82% of small businesses cannot succeed due to cash flow problems.
2. Delayed Receivables: Without proper bookkeeping, your company might be performing work and not getting paid for an extended period of time.
3. Delayed Payables: Inefficient bookkeeping records management leads to paying bills late. It harms your company’s reputation in the industry.
4. Payroll Management: It is impossible to determine and manage employees’ payroll without records of their benefits and incentives.
5. Tracking Expenses: Keeping track of paper receipts, digital invoices, and recurring expenses is challenging if there is no bookkeeping records management.
6. Reconciliation: Ineffective bookkeeping management leads to making inaccurate calculations in your books. It results in misleading information in your financial reports.
7. Tax Preparation: Inaccurate bookkeeping management causes inaccurate tax preparations. It can get you in trouble with the Internal Revenue Service.
8. Fraud: Inventory theft happens frequently without accurate bookkeeping records management.
Impacts of Inefficient Bookkeeping Records Management
1. Being Unaware of Business Health: If your accounting service team is not working properly, you will not know your business’s accurate financial health.
2. Financial Forecast & Business Strategies: Without a functioning bookkeeping record management system, it is impossible to achieve business goals.
3. Internal Fraud: Chances of internal fraud are high when there is no proper system and checks and as well as balances.
4. Paying Extra Cost: Incorporate companies will end up paying huge amounts of money to bank account services if there is no efficient bookkeeping department.
5. Poor Documentation: When the bookkeeping department is not working systematically, there will be wrong invoices, wrong rates, and lastly wrong costing.
Barriers in Bangladesh Market
40% of small businesses incur IRS penalties due to late tax payments.
1. Time: Even with automated software, collecting data and maintaining them is a time-consuming job. Preserving ledgers or journals also takes much time and effort.
2. Cost: Hiring a bookkeeping records management service is costly. Also updating and maintaining bookkeeping software is exclusive for some corporations.
3. Embezzlement: If you are not familiar with the financial records of your company, the bookkeepers can commit fraud against company assets for their own advantage.
Overcoming the Challenges
- Always know your breakeven point and keep extra cash in reserve.
- Establish effective invoicing habits.
- Collect receivables and extend payables.
- Delegate payroll management to bookkeepers.
- Use tools such as Expensify to track your expenses.
- Establish consistency and transparency in bookkeeping records management.
Benefits of Working with Us
1. Meeting All Legal Obligations: We ensure to meet all legal duties in maintaining accurate and updated financial records for your business.
2. Transparency in Reporting: We ensure proper transactions to approve previous payments.
3. Accurate Data: Our data comprise information of financial health of a company is very accurate and also statistical.
4. Precise Bookkeeping Record: Our financial reconciliation terminology is up-to-date.
Final Words
Choosing the appropriate bookkeeper is the easiest method to handle business process issues. Rather than hiring full-time in-house staff, outsourcing bookkeeping management services is a viable choice. As well as small business owners are unable to manage their entire accounting department on their own. You’ll be able to focus on other aspects of your company while enhancing the efficiency of your finance department by hiring us.
FAQs
Is it necessary to digitize bookkeeping records?
Digitizing bookkeeping records offers several benefits, including improved accessibility, space savings, easier searchability, and also reduced risk of physical damage or loss. However, the decision to digitize records depends on your business’s specific needs, resources, and legal requirements.
How long should I retain bookkeeping records?
Retention periods for bookkeeping vary depending on legal and also regulatory requirements. Although it is important to consult with local authorities and accounting professionals to determine the specific retention periods applicable to your business. Generally, records related to tax filings and financial statements should be retained for several years.
What types of records should be managed in bookkeeping?
Various records should be managed in bookkeeping, including:
Sales and purchase invoices
Bank statements and reconciliations
Payroll records
Expense receipts
General ledger entries
Financial statements
Tax filings and supporting documents
