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Business account fitness series: Tip #2 – Keep proper transaction records
In business, details matter—especially when it comes to money flowing in and out of your business account. Maintaining clear records such as receipts, contracts and delivery notes not only helps you monitor your business finances but also demonstrates to your business partners that your operations are legitimate and above board. Properly documenting every transaction helps prevent misunderstandings and protects your business from unnecessary risks. Let’s look at why this is vital to your business’s long term financial health.
Documentation is transparency
Your business account transactions should always be transparent and verifiable. This requires proper record-keeping for all funds entering and leaving your business account, including payments received, transfers and expenditures. By maintaining supporting documents, such as receipts, contracts, invoices and bills of lading, you improve the clarity of your business’ financial records and reinforce the legitimacy of your business operations to stakeholders such as banks, auditors and regulators.
Real-world examples
Scenario 1: Missing document trail
Brian runs a wholesale business and frequently receives large cash payments. However, these large cash deposits resemble suspicious activities, leading his bank to request sales records or supporting documents to verify the source and purpose of the funds. Since Brian hasn’t kept the sales contract and invoices properly filed, it prompts further investigation by the bank, causing delays in transactions.
In summary: A lack of documentation, such as receipts from sales, contracts with clients or shipping invoices, make it challenging to clearly confirm the legitimacy of fund moving through the business account. This can put your business account at risk, as banks may have to pause suspicious transaction for further clarification.
Scenario 2: Compliance complications
Betty operates a small tech startup and regularly processes multiple client payments each month. Throughout the year, she’s been too busy to properly keep detailed records of invoice payments. One day, Betty receives a call from her bank asking about a bank transfer to an overseas account. Betty’s inconsistent record keeping causes delays in providing the required evidence, raising compliance concerns.
In summary: Having organised, detailed records of transactions helps prove the legitimacy of your business income and expenses, ensuring compliance and avoiding unnecessary financial losses. In addition, poor record keeping can lead to added stress during audits.
Why this matters
Banks continuously monitor business accounts to prevent fraud, money laundering and other illicit activities. Maintaining full supporting documentation for every transaction allows you to quickly and confidently verify the legitimacy of your business funds. Proper record keeping also simplifies financial management and ensures compliance with related tax regulations1.
Key point: Keep business receipts, contracts, bills of lading and other supporting documents for every account transaction
These records help clearly identify the source and purpose of funds, protecting your business account from unnecessary risks.
Tip #2 account fitness checklist:
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Do
Don’tBy staying organised and diligent with your transaction records, you’re strengthening your business’s financial foundation and building a trustworthy relationship with your bank—crucial steps to keep your business account functions well and your operations run smoothly.
As your trusted banking partner, we’re here to support you as you begin your business fitness journey and work toward achieving your ambitions. To learn more about how to establish proper business account practices, visit https://www.business.hsbc.com.hk/en-gb/campaigns/account-fitness
Reminder:
1. The Inland Revenue Ordinance Hong Kong requires that all business records must be retained for a period of not less than seven years from the transaction date to enable the assessable profits to be readily ascertained.
Download the Business Account Fitness Guide
Download the complete “Business Account Fitness Guide” now for more real-world business scenarios to help you understand how to establish proper business account practices for smooth operations.
