Why Is Good Record-keeping Needed?

A business entity can stand only if its core pillars are strong enough. These pillars include the different departments, and its stakeholders that give the very meaning of existence to a business entity. From the very first day of incorporation, a business ends in getting involved in multiple domains that include different transactions, planning, activities to be carried out, etc. Each department has got its record of activities that are being performed and are in the pipeline. Now, maintaining such records turns out to be very important as well as crucial process especially for audit purpose. If you are planning to establish a new company, or are already holding an existing company, it becomes your duty to see whether your records are well-organized or not.

“Records management is knowing what you have, where you have it and how long you have to keep it.”

Records serve as the prime component for any organization. Be it related to internal or external affairs of an organization, it plays the crucial role in the achievement of organizational goal. A business entity deals with multiple transactions, deadlines which are to be met specifically regarding both long- and short-term-time frame. This article will take help you in understanding the very essentials of a record. Let’s start the journey…

What Is a Good Record?

A good record is one which holds certain features. These are:

1. Authenticity

A record can be labeled as a ‘record’ when it can be proved and when the purpose of its existence is understood.

2. Reliability

Records represent facts, information, transactions etc. Now, it becomes essential for them to turn trustworthy and it is possible if the records are created at the time of the transaction or soon after an incident.

3. Integrity

It should be complete and unaltered and should be protected from unauthorized changes.

4. Usability

Records must hold the flexibility of reusability. The link between the old and new records should be maintained.

You must have got an idea by now regarding what a record is all about. It is to be kept in mind that if you only prepare and do not maintain the records, it won’t be useful to you in any way. Maintaining them in a properly organized way helps individual departments as well as the organization to achieve their ultimate goal. This can be easily understood by the benefits that could be derived by maintaining a good recordkeeping. Let’s have a look at a few benefits.

Benefits of Good Recordkeeping

• It helps in monitoring the progress of the organization
• It can be used to identify the core source of receipts
• It keeps a track on the expense occurred
• Tax accounting becomes easier
• It helps to prepare accounts quickly
• It eases business operations
• It helps in meeting deadlines
• It eases the process of preparation of financial statements
• It can be used to figures out the strength and weakness of a business entity
• It becomes easier to catch the pulse of finance from the market
• Further investment opportunities can be figured out
• It helps in financial restructuring and business valuation
• It saves both time and money
• It acts as an evidence for legal issues

A good recordkeeping helps you to identify a lot about your business. It speaks on the behalf of the entire organization. Now, let’s understand what it tells about.