With the world being as interconnected as it is today, it’s almost certain you’ll be working with at least one international supplier. Modern supply chains are incredibly complex and involve many moving parts: you’ll inevitably be sourcing either finished products or components of finished products from a company in another country. Nowhere is this truer than in the textile industry.
This can make financial record management a complicated process. If you work in the finance department of a large company, part of your job will be to keep accurate financial records where global suppliers are concerned. You need to have a good grasp of foreign tax systems, import costs and the costs of transferring large amounts of money across borders.
If you find yourself in this position, this article was written for you. We’ve come up with some financial record management tips for companies with global suppliers that you can begin implementing today.
Merge Files When You Can
To simplify financial record management, keep as few files as possible. For instance, you could opt to combine PDF files of various invoices issued by a single foreign supplier during a set period of time to make record-keeping more efficient.
Other files you can combine include financial reports, statements and records of communications with your suppliers. Keeping fewer files on hand is a great way to declutter and improve your financial well-being, especially when you’re dealing with suppliers from all over the world.
Of course, there’s a fine line between merging files to make them easier to navigate and creating a system that makes it difficult to pull up specific information. You should only combine files that are inextricably linked with each other. When in doubt, follow your intuition.
Sort Documents by Financial Year
A way to make life easier for everyone working in finance and accounting at your company is to sort your financial records by financial year. You can do this by creating a separate digital folder for each financial year that you can store either on a local server or on the cloud. This allows you to quickly pull up a specific document from a certain financial year as needed.
Sorting files in this way makes sense from an accounting perspective as documents like a profit and loss statement need to be recorded per financial year. This is a lifesaver for companies with global suppliers, for whom compiling tax records and filing taxes can be incredibly complex.
Consider Bespoke Record Keeping Software
If you need to account for foreign suppliers in your financial records, investing in record-keeping software that’s tailored to your specific needs can be game-changing. This is especially true for larger companies.
There’s a massive range of record-keeping software out there to choose from, and many will give you the flexibility to make changes to the software to suit what you need. As a company that works with foreign partners, you want to find a financial record-keeping tool that takes foreign tax systems into account. You also want an easy way of organising invoices from various international companies.
If you deal with suppliers from other countries, investing in a suitable record-keeping tool can make life so much easier for your finance department.
Use Accurate Best Practice Accounting Methods
Using accurate accounting methods is vital. This is doubly true with the added complexity of dealing with global suppliers. You should choose and stick to a widely recognised accounting method like cash or accrual accounting. The method you select should be both compliant with local authorities and internationally recognised.
Consistently using the most suitable accounting methods throughout your company allows you to create an accurate representation of your financial situation. This is useful both internally and externally. If you’re a large company with a wide network of global suppliers, consider bolstering your accounting department with new hires or outsourcing part of your accounting.
Keeping accurate accounting records involves conducting financial audits on a regular basis. You can perform audits monthly, quarterly or annually, depending on the type and extent of the audit. Check for errors, discrepancies and places where your chosen accounting method isn’t being followed.
Create Backup Records
Businesses, especially those dealing with the added complexity of working with suppliers from various countries, should keep backups of all their financial records in case something happens to the original copies. Dangers like physical damage to your devices and bad actors intentionally messing with your data are examples of threats to your financial data.
Cloud-based backup systems are an excellent choice, as they allow you to back up information as it’s being created. This saves you from having to manually save your data and allows you to keep financial information should a problem like a server crash or cyber attack occur at an inconvenient time. The cloud can also be accessed from anywhere in the world, which is an obvious boon for global companies and one of the many reasons why cloud computing is integral to digital transformation strategising around the world.
To create an added layer of security, you should also keep physical copies of your financial records in addition to your digital backups. You can keep these in locked cabinets or safety boxes located on your physical premises. Only those working directly with these financial records should have access to them.
Back up your financial records both physically and digitally makes it far less likely you’ll lose them for good.
Financial record-keeping can be tough, especially if you have to account for global suppliers. In this article, we’ve gone through some best practices that can help you accurately and safely store financial information.
If you’re a company with international partners, the tips we’ve gone over can be game-changers. Start implementing them in your business today to create a more effective financial record management system.
