It is 2023 and businesses are still unsure about the importance of effective records management. If you are one such business, then you are already lagging behind the competition. The reason is that effective records management is no longer a choice but a necessity. In this article, we will discuss how record management services affect your finances.
How Record Management Services Affect Your Finances
Yet, we do acknowledge that businesses, especially small-medium enterprises (SMEs), do not have the resources or expertise to manage their records. Therefore, such businesses should opt for record management services.
Record Management Services & Finances
There are several ways record management services such as document scanning impact your finances. Let’s review some of the top ones.
1. Saves you Money in the Long Run
If you are managing your records yourself, there is a risk of error. The reason is that records management is not your specialty. Your business niche may be IT or construction. In other words, you have nothing to do with records management. So, without the expertise, you are likely to make a costly mistake.
By using record management services, you can reduce the risk of errors in your records, especially financial data. It can help your organization avoid costly mistakes that can impact your bottom line. That’s not all. When you have proper records of your data, it can help you uncover new opportunities.
For instance, you can identify trends in your spending to identify areas where you can engage in cost savings. Alternatively, you can conduct a staffing analysis to determine when and where you require the most resources. It can aid in workforce planning without which your business cannot survive.
2. Helps you Stay Compliant
Whether you are an SME or a large business, you need to ensure compliance with relevant laws and regulations. For example, the General Data Protection Regulation (GDPR) makes it mandatory for any organization possessing customer data to adopt strict data security measures.
If you think the GDPR exists on paper only, then you are wrong. The most recent statistic indicates that the EU is implementing GDPR with full force. Businesses were slapped with a record €2.92 billion in fines last year (2022). We do request businesses ensure strict compliance with GDPR and local data laws.
Under the GDPR, organizations can be fined up to 20 million euros, or in the case of an undertaking, up to 4 % of their total global turnover of the preceding fiscal year, whichever is higher. For less severe violations, the fine is up to 10 million euros, or, in the case of an undertaking, up to 2% of its entire global turnover of the preceding fiscal year, whichever is higher.
So, records management services can help ensure compliance with relevant laws and protect you against hefty fines. Record management service providers are well aware of such requirements and can help manage your records according to the relevant regulations.
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3. Protects you from Fraud
If your organization does not have proper records, then detecting fraud can be a challenge. With your records in order, it is easy to identify suspicious activity. Suppose you are an IT business operating in Dubai. You offer managed IT services to clients, meaning you have access to their critical IT infrastructure.
If you don’t have a proper record management system in place, it would be challenging to identify if there is unauthorized access to the systems. However, with a proper record management system in place, you can easily detect an unauthorized IP address or log in. It makes it easier to put an end to the cyberattack immediately.
Now, let’s apply the same thinking to your finances. If you don’t manage your accounts properly, reconciliation will be a hassle. It makes it easier for suspicious or fraudulent activities to slip through and cause significant losses. However, with proper records in place, you can easily monitor your finances.
4. Improves your Credit Score
As a business, you may require loans to undertake a new project, fund expansion, or for any other matter. Whenever you go to a bank, they will look at your credit score to decide if they will provide you with a loan or not. Now, if you don’t have proper financial records, then it can be challenging for them to determine your credit score.
Just because of poor records management, they may refuse to grant you a loan. Even if they do proceed with the application, they may charge you a higher premium. On the other hand, if you have proper records of all your finances, you can easily convince them about your ability to repay the loan.
By maintaining accurate financial records, you can improve your credit score. Not only will the bank grant you the loan but may do so at a much lower premium. So, proper records management can give you access to instant and cheaper funding options. A record management service provider can help take care of your financial records.
5. Simplifies Tax Preparation
Again, regardless of whether you are an SME or a large business, you must pay taxes. Unfortunately, a lot of businesses got busted because they fail to pay their due share of taxes. Regulatory action leaves them with no choice but to fold. Why do businesses fail to pay the taxes?
Well, not all of them have bad intentions. In most cases, due to poor records, organizations are unable to correctly calculate their payable taxes. They pay less and when the taxman comes for the audit, their actual payable taxes are higher. Record management services can make tax preparation pretty easy.
They can provide you with up-to-date and detailed financial records. It can help you avoid mistakes on your tax returns and save you from penalties.
It concludes our views on how record management services can impact your finances. The discussion shows that with the right records management provider, your business can save a great deal of money. You can use this money to expand your business and improve your quality of life.
Lastly, whenever choosing a records management partner, ensure that they are the right fit for your requirements. You can browse their online reviews or talk to past/existing clients to know more about them.