Getting A Bank Loan: Importance of keeping financial records
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– February 9, 2012(Edit Post)Posted in: General

An entrepreneur once approached a bank for a loan and was told that his loan application was not approved as his business has little or no business transaction record to show the financial status cum viability of his business. You would agree with me that he learnt in a hard way.

Many a business owner often find it hard just like the earlier mentioned individual to secure credit facility due to the dearth of the record keeping practise of their business. Since their business transactions is hardly differentiated from their personal transactions, they keep little or no financial records with the harsh consequence of low credit rating. Due to this, they tend to loose out on most prospect of increasing the scope of his business with the use of bank finance.

The keeping of accurate financial records cannot be overemphasized as its forms part of the parameters used by credit advancing agencies/ institutions to ascertain the financial strength of their would be debtors. More so, keeping accurate financial records will be useful for the following use: whether the business is growing, for accountability, for future reference, for financial reporting e.t.c.

Further to this, it is a statutory requirement for public limited liability companies to maintain accurate financial records and report on same for public consumption. This is to meet the needs and expectations of the government, creditors to the business, shareholders of the firm, employees of the company, credit rating agencies and the general public. All these individual require financial information about the business firm which they use for purpose of analysis in their relationship with to corporate firm.

Hence, there is no gainsaying that having a structure in place to help generate, process and store financial / business transactions is important. This is a bridge pier upon which globalization rests heavily. In the modern world, information and information about the business is well sought after and there will be no excuse why it’s not available when requested for.

Source: http://africle.com/getting-a-bank-loan-importance-of-kepping-financial-records/