Accounting data: what a company should keep and what should be left to the accountant
Accounting data is an important source of information for managing, planning and directing a company. Every company should systematically and regularly work with the data it holds in its accounts and use it to have a comprehensive view of its situation, to anticipate risks, manage cash flow and plan for growth.
But what accounting data should a company keep with it and what should it leave with its accountant(s)? That depends on what form of business the company has, what its needs and capabilities are, and how good and well set up the relationship with the accountant(s) is.
Stock data is information about a company’s stock levels, i.e. how many goods the company has in stock, where they are located, their quality, price and shelf life. Warehouse data is important for effective warehouse management, optimizing the buying and selling of goods, reducing stock losses and meeting customer requirements.
A company should keep its stock data in electronic form, for example in a warehouse software or application. This will make it easier for them to work with stock records, inventory, issuing documents or linking to their accounting software. The company should also regularly check its stock data and keep it up to date.
Financial data is information about a company’s financial position, i.e. its assets, liabilities, income and expenses. Financial data is essential for financial statements, tax returns, business analysis, budget planning, loan or grant applications, or for audit or inspection purposes.
A company should leave financial data to an accountant if it does not keep its own books. An accountant is a professional who knows the legal requirements, accounting standards and tax rates, and who can prepare and file all the necessary documents correctly and on time. However, the company should keep copies of its financial data, both electronically and on paper, in case of need or inspection.
Accounting and inventory data is an important tool for managing a business. A firm should carry the financial and inventory data it needs for its day-to-day operations and leave the financial data that requires professional processing to the accountant.
If you don’t have your data under control…
What happens when you don’t have your economic data under control, for example, if the accountant only has it in her office or on a laptop somewhere at home:
- You don’t know which way your data is backed up.
- You can’t access them 24/7/365. You may think it’s unnecessary, but you never know if such a need will arise.
- You don’t carry regular copies of your backups.
- You have no idea whether the data is adequately secured (for example, it may not be password protected, the accountant doesn’t have two-factor authentication set up, etc.).
- Only a small number of people outside your organisation have access to the data (and so you cannot access the data if they are indisposed).
- You have no visibility of who can actually access and handle your economic data. Etc..
What can go wrong?
- Your accountant stops communicating (Murphy’s Law – usually at the least convenient time).
- The accounting firm backs up the data badly and loses it for various reasons.
- You don’t have geographically separate data backups in multiple locations. Then all it takes is a fire or a server being destroyed and you’re out of data.
- Someone encrypts the data and uses it for illegal activities (e.g. blackmailing their employer – the accounting firm or you as a client).
- The only backup your accounting firm has cannot be restored. = You have no data. etc..
A story from practice
Here we refer you to our latest case study entitled When the server that holds the accounting firm and its backup burns down, where we present the stories of two of our clients who experienced a hot moment due to losing their accounting data.
Remember: No data = not managing your business.