5 Ways Accurate Financials Increase the Value of Your Business
The importance of maintaining accurate financials is critical. Not only because it makes your accountant happy, but because accurate business records can increase the value of your business.
Maintaining accurate financial records makes all areas of doing business easier, from filing taxes to making informed decisions about a wide range of issues. Solid financials can also increase the value of your business in a variety of ways, including by improving strategies and increasing financial clarity. Here are five other ways you can bolster the value of your business through clear and accurate financial records.
1. Increase transparency
Transparency is good for business. Both clients and investors benefit from transparency, and it helps you understand exactly how your business is performing so that you can adjust your game plan where needed. But businesses often mis-report and mis-interpret certain numbers, such as reporting the revenue earned without differentiating between cash and accounts receivables.
2. Reduce tax errors
Accurate taxes require accurate financials, and muddy numbers increase your risk of making costly mistakes, which can result in over- or under-paying your fair share as well as leave you vulnerable to fines and penalties. Precise financial records can help you lower your tax burden by helping you make your case to the government.
3. Prevent costly mistakes
Detailed financial records help you catch potential problems early on, from simple accounting or payroll errors to discrepancies that could signal illegal activity within the ranks. Large corporations spend a great deal of time reconciling their books on a regular basis for this reason. The value of your business depends largely on your accuracy and ability to keep your finances under tight reins.
4. Improve payment cycles
Detailed financials play an important role in managing your accounts payable and receivable cycles. Balancing expenses like wages, dividends, loan payments, and inventory against what’s coming in ensures you know where your account stands at any given time. It can help prevent late fees and overdraft charges and well as enable you to find ways to cut back on expenses.
5. Manage better
Your company’s financials affect every other aspect of your business. Having a clear, accurate, and detailed picture of your financials enables you to make the best decisions when budgeting, buying inventory, hiring employees, ordering supplies, and looking to expand. A well-managed company is more valuable than one that’s poorly managed.
If you feel like you’ve lost control of your financials, an experienced and dedicated accountant can help you get back on track. Your accountant will keep accurate and up-to-date financial records and offer detailed reports that give you concise snapshots of your financial health. Contact us today to start a conversation about how we can help you improve your financial practices and the value of your business.
- Family Successions: What Bill C208 Means for Small Businesses in Canada - February 16, 2022
- Best Practices & Tax Tips for the Self-Employed in Canada - February 16, 2022
- How to Reduce Tax Liability When Planning a Family Succession for Your Business - February 15, 2022