Double Entry Bookkeeping: A Must-Read for Business Owners

Posted by Gillian Vitug

Feb 10, 2016 11:34:00 PM

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Double-entry bookkeeping has become one of the foundations of modern business accounting. And with good reason. Through this systematic method for recording critical business numbers, your SME will have a more effective way of making accurate calculations of its profits and losses. In that case, opting for the double-entry system also enables your SME to detect fraud and discrepancies early on.

Most business owners would agree that double-entry bookkeeping has a myriad of advantages to offer, especially for business and organizations that have a complex cashflow. To help you further determine if double-entry bookkeeping is for you, here are some of its most notable advantages.

 

1. Shows a Systematic Technique

One of the primary perks associated with a double-entry bookkeeping system is that it provides a systematic technique for monitoring business financial activities. Due to the more organized records that have become a trademark of double-entry accounting systems, keeping track of your critical business numbers has also become easier.

 

2. Provides Comprehensive Records

At one point or another, you would be needing the specifics of a random business transaction. The good news is that with a double-entry bookkeeping practice, you can gain access to the different aspects of each business transaction. In the long run, this will make financial reporting and auditing a breeze.

 

3. Fosters Accuracy

Crunching numbers on your own often comes with the possibility of making unintentional errors. But since double-entry bookkeeping keeps your records in both debit and credit columns, making such errors is highly unlikely. And with such a functional and seamless process in place, you can effortlessly save more time, making your work more efficient.

 

4. Helps Manage Cashflow

Running a business does not come cheap. Luckily, there are some tips and tricks to help you look into your cash flow statements and control costs. Double-entry bookkeeping is one of them. Through this process, you can have all the pertinent information you need to keep your business expenses to a minimum, paving way for a significant cut in your business budget.

 

5. Improves the Decision-making Process

Last and not the least, a double-entry accounting system empowers you with a lot of important information. Through these information, you can make better business decisions for improved profitability and business performance.

Double-entry bookkeeping is an imperative if you want to push your business to its full potentials. But you don’t need to do it manually - there are modern accounting tools nowadays that include double-entry bookkeeping on the side. Xero and QuickBooks are just two of the more mainstream cloud accounting tools that incorporate double-entry bookkeeping in its core program.

 

Need more help with cloud accounting basics and other specialized business and accounting services? Check out our website at for more information!Download Solution for Startups

Topics: Accounting and Bookkeeping Services

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