Recordkeeping is one of the major tenets of finance. An unclear transaction history could spell trouble for your business down the line. Stakeholders, investors, and government authorities- all of them would like to believe that your company is what it claims to be and the spending habits are consistent with its claims. A structured log of financial transactions can help in justifying the reason and usage of specific funds during the specific period.
Audits are usually a high-stress environment for any organization. If the transaction trails are not properly maintained, it is bound to come out during one of the regularly scheduled audits or during a surprise audit performed unceremoniously by any of the government bodies to ensure compliance. If during any such audits a missing link surfaces, it can be catastrophic not only to the business' image but also to its future. An audit makes sure that your company is legally spending money and it goes where it is supposed to. Auditors go through your company's books with a fine-tooth comb and match all transactions with the bookkeeping ledger. If any credit card statement, receipt, or invoice seems worrisome, it is brought up and they might ask you to show its matching transaction slip. If you are unable to prove the transaction's authenticity at that time, your business could be deemed non-compliant, and even worse, your license could be revoked on grounds of illegal financial activity. That's why it is always better to prepare for an audit beforehand. The financial records should be maintained and stored in a way that if an audit has to happen the very next second, you can show all relevant documents and supporting transaction trails. Maintaining a solid audit trail is vital to save your business from falling into a pit of financial loopholes.
An audit trail is a collection of documents that help to prove that your financial statements are accurate. Auditors work in a backward fashion- they match all your financial statements to all the steps that led to the financial record. This way, it is easier for them to spot inconsistencies in the statement right away. A robust audit trail doesn't just include the financial documents but it also includes any alterations that were made to the records and by whom.
Some of the documents that are required for an audit trail are:
These documents should also have the necessary approvals and authenticity on them.
Considering the number and volume of records that need to be maintained and preserved, it doesn't seem ideal to maintain them manually. The sheer stack of papers would come with an added risk of maintaining them properly as it is very easy to lose a piece of paper. That's where automation enters to make it easier for you. An automated spend management platform, like EnKash, comes with a studded audit trail functionality that maintains all records for you on a digital database that can be accessed from anywhere at any time. To maintain a digital audit trail, it is ideal that your business accounting is digitized from end to end. This makes the entire process of invoicing, collection, and other key transaction details digital so that they can be stored together in a single source.
Let's take a look at the benefits of automating your business's accounting along with an automated financial audit trail:
With an automated audit trail, you can get lifecycle visibility into your business' finances. It provides you with a bird's eye view of every financial transaction ever made, the AP and AR, the working capital, cash flow, and bottom line- all at the same time on a single platform. This makes decision-making more efficient and informed as you have all the data right in front of your eyes.
When you have access to each transaction trail, you can easily pinpoint to pain points of your balance sheet. With an automated platform, it becomes convenient to highlight possibilities of fraud in expense records. Transactions that look shady can be traced back to the source and can be audited to uphold their authenticity. With such a vigilant watchkeeper by your side, your finances can never go haywire.
A compliant business is a dependable business. Automated audit trails allow peace of mind for business owners because of their ability to get traced to the source with supporting documents and transaction trails in place so that if ever an auditor comes knocking on your doors, you can let them in your business books without a single worry. Automated accounting software also keeps an eye out for updates and changes in government rules and legislation. This way, if ever industry standards or legislation is changed without your knowledge, your accounting software will remind you to upgrade them at a moment's notice.
With automated accounting software, you can get real-time visibility into your company's expenses on all levels. This level of transparency at all times can be very helpful to set spend protocols in place, request quicker turnaround on approval timelines, and suggest spend policies for an even more efficient transaction behaviour. Real-time spend visibility enables centralized control but offers decentralized spending liberty. It can also help in generating actionable insights for improving financial budgeting and putting spend controls in place.
In addition to core accounting, EnKash also offers many useful features not found in other traditional software. Some of them are:
Trust EnKash to upgrade your accounting for an efficient and compliant accounting experience. Call us for a free demo to witness how EnKash can revolutionize your business finances.