Why it is important for a business to keep financial records in Kenya

Accurate financial records are the foundation of any healthy business.
Accurate financial records will ensure you make informed decisions, stay on the right side of the tax man, prove your value to investors & access credit.

Without accurate financial records, there is a high chance of hitting cash flow issues, wasting money and other financial issues, which could ultimately lead to the closure of a good business. In this day and age, the importance of keeping accurate financial records cannot be overemphasized.

Lets now look at 4 reasons why keeping financial records is important for any business.

1) Budgeting

Financial records are important because they help you budget.They show you where your money is coming from, going and how much you’re spending . This helps you keep track of your spending and make you more accountable. By keeping records you’re better able to budget your finances.
With an accurate budget, you can appropriately plan for future expenses and figure out resources that would be needed to cover them.

Business owners need to have solid budgets so as to run successful businesses. Keeping financial records is a critical piece when it comes to budgets.

2) Taxes

Businesses need to file their taxes every now and then. To avoid the scramble and stress that is associated with this process do yourself a big favour and keep accurate financial records. The tax filing process can be drasticaly simplified and made more efficient by keeping financial records.

3) Organisation and growth

A business that doesn’t know its financial position due toinaccurate financial records is disorganised. Finances are the cornerstone any business. Keeping accurate financial records will help you have a clear road map of where you currently are and where you need to go in order to achieve growth.

4) Securing Investment & Credit Access

If you intend to rause capital via investors at some point, financial records are critical. Any serious investor will go through your financial records before decided on whether to invest in your business or not. Investors are more likely to invest when you have accurate financial records.

Financial institutions like banks will want to review your financial records before offering your business a loan, overdraft or other credit facility. By not keeping accurate financial records you are hindering your credit eligibility.

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