Maintaining the book of accounts from the date of incorporation plays a very crucial part for any business. However, start-ups and SME’s set up at a small scale and might even miss certain transactional recordings due to lack of finances, but within a year or two of the business establishment, they do realize the importance of accounting records and track down of the finances. The Nigeria serves as a base for start-ups and SME’s and helps the business entities to get an international exposure. When it comes to business establishment in the Nation, the commercial law of the country makes it a mandate to maintain proper records. Be it at the later stage, but it becomes a mandate for a business entity to update its backlog accounts so as to keep a proper check on the company’s financial flow. If you have recently initiated your business, then you should know that the accounting services play a crucial role and the backlog accounts are to be updated. This article will give you the insights of maintaining the backlog accounts.
What Is a Backlog Account?
At the initial stage of business setup, many companies forget to update their income or expenses. The basic maintenance that happens takes place in an excel sheet or any rough file. Be it an investor, or an entrepreneur, start-up or established business, one thing is to be kept in mind that maintaining these accounts today will lead your business to the success ladder. If you fail to do so, then your business future is uncertain.
Report Generation for Backlog Accounts
Reports are to be generated to measure a company’s performance. Reports are to be generated accordingly to foresee the future of the business. These reports are a mandate for any business organization. Some of the most important accounts and reports that need to be updated are:
- Balance sheet to reflect the
financial position - Profit and loss account
- Cash flow statements
- Receivables and payables list
- Report on sales performance
- Report on expenses
- Financial ratio analysis
- Working capital analysis
- Break-even analysis
Now, let’s understand the benefits that can be derived by maintaining the backlog accounts.
Benefits of Updating Backlog Accounts
Better Cash Flow Management
Updating the backlog accounts will provide the management insights as to how the company used to manage the funds previously and learning from it they would be better able to manage the funds of the company in the present scenario.
Easy Audit Process
As all the previous data will be available to the auditor, it would be easier for him to conduct an audit of the company. It would also allow him to compare it to the previous data generated by the company and derive a trend line for the organization.
Time Saver
If the previous financial records of the company are not present, the management will not have to spend its precious time in generating the records for the previous duration so that it can compare them with the current reports. This would delay all the important developmental processes of the company.
Ease in Making Real-Time Decisions
After the comparison of the previous data and the current data, the management will be able to pinpoint the loopholes in the working of the organization and take decisions for the betterment of the company.
Plan for the Future
After studying and analyzing the data of the previous duration, the upper level of the management can come up with the plan of action for the company. This plan of action would mention the mission, vision and objective of the company and also state the achievable goal till the next quarter.
Ease in Data Retrieving
When the backlog accounts are updated, it would be easy for the management of the company to find out the previous data in case they would like to chart a trend line or initiate a research as to what are the likes and dislikes of the customers.
Avoiding Duplication of Data
It is possible for small scale industries to miss recording certain transactional data. At that point in time the company might feel it does not need to record the entry but later might require it. Later, while updating the data, any duplicate the entry is promptly removed.
Transparency of Funds Available
With the data of all the quarters, the company would be better able to understand what is their financial position and in which department of the company do they need to focus next. Any incomplete record will pose many questions in front of the management.
Proper tracking of the company records helps in building its future. If you haven’t maintained it from the initial date, then it is advisable to do so. It will not only help you to build the future but also gives you an idea wherein you can cut-down your expense as well as maintain a better financial health for your company. Apart from this, it will help you to attract investors to leverage your business potential to its heights. We at Ogedengbe Blessing & CO , provide a wide variety of accounting services and help you to maintain your books of accounts from the date of incorporation. To discuss further, feel free to contact us. We’d be happy to assist.