Bookkeeping is very useful. Really? You have accurate records. So what, what can you do with them? Here are a few boilerplate suggestions why the effort is worthwhile.
Plans need to be documented to be reviewed by partners and staff, bankers and advisers. And while words and attractive images speak volumes, at the end of the day, any investment is defined by the financial results.
Producing realistic forecasts for anything except greenfield startups requires some historical data to begin with, to establish trends and estimate costs.
So QED – without good enough records, the task becomes guesswork.
After investment decisions have been taken, the more humdrum requirement is to construct annual / monthly / weekly / daily budgets to compare with actual financial events and make control corrections in the business to keep it on track.
When people talk about bookkeeping they usually refer to financial books and records in the back office.
As used to be referred to in the North of England , scorekeepers provide the useful knowledge of how his business is doing to the owner.
Well designed systems to record transactions in a timely and accurate manner facilitate this.
Business records are lets face it primarily financial. But there is more – the operational metrics that give substance to the day to day business also generate a vast amount of data which, if deemed important enough, needs to be recorded and reported just as the dollars and cents. The principle is the same.
FINANCIAL / OPERATIONAL CONTROL
With the vision in place, and a practical budget compiled, the next step in realising the dream is to compare actual revenues, costs, returns and operations. The final essential is to take action if the variances which result are detrimental to goals. The most obvious is cost cutting, but this can backfire if done without deliberation on the consequences.
Costs of compliance with government regulation are notorious and with good reason. If you are to avoid costly hours *wasted* finding / recreating the necessary records and reports, start with well kept books.