Every business, regardless of its size, sector or location is required by law to "keep books". The act of keeping books, or Bookkeeping, involves recording the financial transactions which occur in a business into records known as ledgers. This unassuming and slightly dull act of recording transactions is actually one of the most important functions within a business. As well as keeping a business compliant with legal regulations, bookkeeping forms the basis of all decision-making within a business.
All businesses need money in order to survive and succeed. As a business owner or manager you are expected to make numerous operational decisions, including financial decisions such as what price to sell goods and services at, how much stock to buy and at what cost, and what investments your business should make. In order to make such decisions you first need to know how much money you have, how much you are due to receive and how much money you are due to spend. The simple function of bookkeeping provides this valuable and critical information.
No doubt you are familiar with Balance Sheets and Profit & Loss reporting, but are you familiar with the processes which provide the meaningful information found in these management reports? Business operate on a collective of systems - production, customer service, administration, marketing etc - and Bookkeeping is a major part of a business' financial system. Without the act of recording financial transactions, the high level financial reports which you use to make key business decisions would not exist.
Managing and growing a business is a difficult and time-consuming process, and many managers and business owners see Bookkeeping as unnecessary red tape. However this negative attitude and perception of such a vital business function does little to improve a business's prospects. Adopting a practice of effective bookkeeping can help businesses to reduce costs and maximise their current resources.
It would be ridiculous to suggest that all managers and business owners should themselves be involved in the day-to-day aspects of bookkeeping, so it is important that the processes can be managed elsewhere. Although many businesses prefer to outsource their bookkeeping, the most cost-efficient and least risky option is to manage the process in-house delegating responsibility to bookkeepers and finance workers. Ultimate responsibility for bookkeeping however lies at the top, but shrewd managers and organisational leaders recognise the benefits of keeping their fingers in pies, and Bookkeeping is one of the tasty pies to be found!
It is also important that business owners and managers recognise the value of bookkeeping training, not just for employees but for themselves as well. Bookkeeping is an evolving process, and although legal regulations themselves rarely change, software packages and accounting processes are continually being improved. Bookkeeping training itself can take on many forms, from qualification based study such as the ICB (Institute of Certified Bookkeepers) to software specific courses including SAGE and QuickBooks. Much value can be derived from supporting the books through bookkeeping training; after all it's bookkeeping itself that is supporting your business!
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