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.
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