Good business record keeping enables manager :
• To be able to know if the business is making or losing money in general and on specific jobs or product sales.
• To be able to price business product accurately. Good record keeping will prevent business from selling products cheaply. A lot of business are making a lot of sales but they are not making profit because they do not keep records to enable them evaluate their business in terms of sales and expenses.
• To enable manager make the tax agencies know how the business is performing.
Any business owner who does not take good record keeping seriously is really creating damage to himself, his business, and ultimately positioning both at a disadvantage position for productivity, impact, and exploit.
Knowledge of profit and loss:
It is very important for any business owner to know if his business is making or losing money. But how can he know? Can he just wake up one morning and make his business provide profit and loss information from nowhere? Of course not! Well, even after owner price his product, he will have to know how his pricing compares with reality. If he is making some bad decisions with his pricing, and he waits until end of the year to find whether he has lost or made money, it may be too late to do anything about it.
Running a business profitably it is tough. It can take a long time for some of manager decisions to prove right or wrong, even with good record keeping . Therefore, the manager should get business records organized and at least be paying attention to it on a daily and monthly basis so that he can see what is happening in time and effect the required changes.
Effective and efficient product pricing:
Product pricing is the first single most important thing a manager have to do in business. He have to charge more than it costs to produce products, otherwise he will be trading at loss. To be able to price product effectively and efficiently, manager will need records that inform him of the number of employee in business, the amount of loan being paid back to lenders, workers compensation bills, electricity bills, rent, product liability insurance, local council bills, advertising, etc.
If a manager do not have these records how can he price his product accurately and position business for success? Pricing products and or services without taking into consideration what it will cost to produce and deliver those services and or products to targeted market is a major step in the path of business failure.
If a business owner is determined to succeed in business he will definitely embrace tasks of organizing records for with it he can get competitive advantage over competitors. Nearly anyone can figure out the direct costs of their product or service – a good set of books will tell business owner just what ought to go into that equation for overhead, and that is the difference between profit and loss.
Knowledge of Cash Flow:
Good business record keeping enables a manager to understand and manage cash flow.
One of the most important things a manager will learn from keeping good records is how to understand and manage cash flow.
Working effectively and efficiently with Bankers:
This is important especially when comparing bank statements and deposits and drawings ,seeking for explanations for any discrepancies ,and taking necessary corrective actions to rectify the discrepancies and putting down the measures to prevent it occurring again .