Book Keeping and Financial Planning – An overview

Book keeping refers to the maintenance of records of all financial transactions of any organization or individual. It is an integral part of the accounts maintenance of any firm. The transactions which will be noted down include payment, purchase, receipt and sales any the organization or the individual. Usually there are two types of book keeping: single entry and double entry. The person who is responsible for the book keeping in an organization or firm is called the book keeper.

 A number of independent firms too, offer book keeping services these days.  He or she has to make sure that all the transactions are recorded daily in appropriate ledgers and day books. This data is then used to write the report on the accounts of the firm. Single entry book keeping, only records the income and the expenses. In double entry book keeping, every transaction is recorded in two different accounts as corresponding but opposite entries.

Outsourcing the book keeping of an organization’s accounts to another firm is a common practice at present. This reduces the cost of maintaining the financial record and also accounting costs. Hiring a book keeper means one has to pay for his salary as well the other perks and benefits of a standard book keeping job. The firms today, even offer online services including personalized book keeping services.

One should initially start by hiring a firm to do the basic book keeping job and keep a tab of the numbers. Once he or she is assured of the firm’s performance, it can be asked to handle more complex and crucial tasks. It can be difficult to find a trustworthy book keeping firm in the current scenario. One can ask for recommendations from associates and acquaintances. One could also talk to the present clients of the firm for feedback.

Financial planning is the planning of one’s finances to meet one’s goals. Financial planning enables a firm to estimate the capital required to achieve its goals. It helps one to set up policies regarding investment, procuring capital and managing funds of an organization. When a financial plan is being drafted the firm should establish the time period of the plan carefully. The capital requirements can be determined through factors like current, fixed asset cost, expenses for promotions etc. The capital structure of the enterprise can be determined from its debt to equity ratio.

Financial planning helps in policy framing, including lending, borrowing policies. It is required to maintain a stable relation between inflow and outflow of funds. Enterprises can draw more investments through careful financial planning. It reduces the risks that an organization may face due to the fluctuations in the market. It prevents unforeseen situations that can interfere with the growth of the company.