Why Accounting & Bookkeeping is necessary for businesses?
Accounting and bookkeeping is a very systematic and comprehensive recording of a financial transactions relating to any business.
Accounting helps the management of the company to be able to ascertain and understand the financial position of the business. With all accounting activities, the final report provided helps management to know the business position so they can be able to know which direction they are heading towards.
Accounting is very important for any business regardless of the size and the nature. It helps in recording, classifying and finally summarizing the transactions. Accounting and bookkeeping helps in preparing a well analyzed financial documents such as balance sheets, trial balance, profit/loss statements.
‘Accounting is the language of business’
Accounting plays a key role in decision making, planning, and controlling processes. with the help of well organized documents, businesses can reduce the threats of theft and frauds.
A standardized accounting and bookkeeping enables the business to run with efficiently, effectiveness and accuracy manner on all the activities. This leads to more productions and higher sales since the management will make the right decisions and proper planning due to the good flow of transactions in a business. This will also assist in the forecasting.
Importance of Accounting & Bookkeeping in Organization
A business organization involves an individual or a group of people who collaborate so as to achieve certain commercial goals. Businesses also outsourcing Accounting companies in Dubai to handle the accounts of the businesses.
i) Planning Budget
Budgeting is a key factor in all the businesses. Planning budgets help business to make effective strategies which leads to save money and noticing any expenditure exceeding the budgeted amount. To make a budget the documents to be available in a proper order, they must be very well maintained through accounting since they are the basis of planning and making budgets.
ii) Banks and lenders
In order to get any loan from the financial institution like banks, you must be able to present your financial status in an international standardized order. So in order to make it, you need to have proper accounting and bookkeeping system so as to present various books of records such as profits recorded, assets and liabilities and taxes. Financial institutions will review and analyse them carefully before landing to a decision of awarding loan.
iii) Keeping Records
Every business in UAE needs to keep records of all the accounts and act upon them in order to run the business smoothly. In this case, accounting and bookkeeping plays a big role in keeping records. All records are recorded, collected, organized, and interpreted in order to be communicated to the end users, therefore helping in making an economically viable decision which will lead to the positive productivity of the organization.
iv) Decision Making
Any economic or financial or any decision regarding the functions of the business organization is made depending on the financial statement of the organization. An accurate financial statement is a result of accounting followed by the accounting laws and principles. Without proper accounting in a business organization, the executives can’t make a correct decision since they will be operating in blindness hence making it impossible to achieve organizational goals and objectives and it will produce a disastrous outcome.
v) Information to Investors
Financial statements are used to represent the organization to the stakeholders such as debtors, creditors, government, and investors, customers and employees. Many investors will run away from your organization if you lack financial records and accounts to presents so as they can be aware of the business progress. Investor wants to know the current and future progress of the company before making a decision to invest in a certain organization.
vi) Managing and Monitoring Cash Flow
Proper accounting systems will take care of working capital and any other cash requirements within the business organization. Accounting and bookkeeping will help you in monitoring the cash flow and to keep a strong control on how the money is going out and how the money is coming in.
SAB is a firm of chartered accountants who provide accounting and bookkeeping services in Dubai. SAB is one of the best accounting companies in Dubai. To outsource accounting activities, feel free to Contact us.