While some entrepreneurs may consider auditing as an uncomfortable and unpleasant process, it is actually central to commercial success in the modern age.
This is particularly true in the diverse and competitive technology sector, where firms must maintain intricate knowledge of their finances and report them as accurately as possible.
With this in mind, you should definitely ensure that your tech firm is audited regularly. Here are the main benefits of this:
1. Maintain Stakeholder Confidence
At the heart of every audit is transparency, and tech companies can definitely use this to their advantage.
More specifically, internal audits can drive accurate financial reporting, which in turn affords stakeholders confidence in terms of the business that they work promote every single day. This contributes to informed and positive decision making, while also creating a far greater level of sentiment within the venture.
Conversely, inaccurate financial planning can create significant levels of mistrust between key stakeholders, causing a potential breakdown in communication and a downturn in employee productivity.
2. Prepare for Mergers, Acquisitions and Investment
The technology market is increasingly dominated by mergers and acquisitions, as start-ups look to capitalise on their innovations and monetise brand new ideas.
2016 saw a staggering $500 billion worth of mergers and acquisitions in this industry, for example, which represented the second-highest annual total since the turn of the century.
In order to enter into such agreements or secure any form of third-party investment, however, you’ll need to present accurate and detailed financial reports. Regular auditing can help with this, as it helps you to manage your finances over time and refine reporting processes to deliver the best possible results.
3. Manage your Operational Costs More Effectively
On an even more fundamental level, holding regular and objective audits can enable you to manage your operational costs far more efficiently. After all, audits will provide a comprehensive review of your expenditure and revenues over the course of the year, offering a clear insight in the financial performance of your business and where it’s falling short.
In more specific terms, it’s possible to identify isolated or recurring instances of financial mismanagement, including occasions where you have spent over-the-odds for materials, labour and services.
Once you’ve identified these issues, you can implement practical steps to reduce your annual spend, hopefully without impacting on the product or service that you deliver to customers. This can deliver incremental savings over time, boosting your businesses bottom line and driving organic growth on a considerable scale.