Being an entrepreneur is synonymous with facing frequent challenges, among which navigating the complexities of bookkeeping and accounting is common. In an entrepreneurial hub like Singapore, where so many businesses find their perfect breeding ground to thrive, coping with these challenges requires a robust strategy and a comprehensive approach to financial management.
In this age of automation, where software plays an active role in managing and tracking financial transactions and generating reports while complying with tax regulations, bookkeeping & accounting feels like a cakewalk. Still, business owners must delve deeper into the intricacies of it to gauge the benefits businesses will have in the long run.
Simply put, accounting refers to preparing a comprehensive financial report or statement that includes revenue generated, profit earned and expenses incurred by the business on a quarterly or annual basis. While bookkeeping is recording day-to-day business transactions while classifying all those transactions, the question is, why do we need it? There are many reasons to count upon when it comes to analyzing the beneficial factors associated with it; let’s have a look at some of them:
- Staying afloat with financial and legal obligations: Having an accurate financial record for any organization is paramount to attain sustainable growth, and it is way beyond just the legal implications. Applying decent practices in accounting and bookkeeping helps you be aware of the latest rules and regulations implemented by the government. Since Singapore has an ever-evolving business landscape, policies and schemes are upgraded regularly to provide wings for the flight of entrepreneurs.
- Enhanced efficiency & productivity is another milestone achieved through automating the bookkeeping process, as the manual method is prone to errors and time-consuming. However, with the automation of accounting and bookkeeping, a surplus amount of time and resources are free to be used for increasing the overall efficiency and productivity of finance teams, thereby optimizing the entire business operations.
- Decision-making is no longer arduous because good bookkeeping and accounting provide access to financial information vital to assessing a business’s performance. It is like having a bird’s eye view of the company’s finances to make strategic plans and investment decisions in the future.
How does this work for businesses that engage in the global economy while performing cross-border transactions in Singapore?
The larger the business empire, the greater the need for a seamless financial reporting and reconciliation process. For businesses involved in a regular currency switch, let’s say from Singapore dollars to US dollars (SGD to USD) via multi-currency business accounts, it has numerous advantages to streamline the accounting and bookkeeping process.
Let’s check them out in detail:
- While performing financial transactions in multiple currencies, these recorded transactions in real-time provide a descriptive picture of the company’s financial activities. Accuracy is of the essence when it comes to relying on this reporting to formulate future business plans and an appropriate decision-making process.
- Integrated exchange rate updates on currencies with multi-currency accounts provide an upper hand for seamless accounting and bookkeeping with real-time currency exchange. This ensures up-to-date financial information with accurate currency conversion for every transaction.
- Consolidating financial information from multiple entities is another time-consuming process for businesses operating globally. It could be simplified by enabling transactions to be recorded in their original currency, and accountants can further automate the conversion of a subsidiary to a common currency. Therefore, the consolidation of financial information from multiple resources becomes simplified.
- Using multi-currency accounts to leverage the fluctuating currency conversion rate is another hack for enhancing the cash flow of business organizations. Companies that hold funds in different currencies can look for favorable circumstances. promise high returns, and they exchange currencies only when exchange rates benefit them. This reduces costs and optimizes cash utilization.
- Fluctuations in currency exchange rates can be a boon and a bane for entrepreneurs. Still, the remarkable features that multi-currency accounts provide in the form of forward contracts or options contracts are effective in mitigating the risks. These tools help account holders lock in favorable currency exchange rates for a certain period.
Hence, multi-currency accounts answer all the burning questions for entrepreneurs regarding managing their business finances on the international market. Currently, they are indispensable tools for simplifying accounting and bookkeeping processes and managing currency-associated risks effectively while complying with all the necessary principles and regulations of business finance listed by the government.
