Past records of the business are maintained. The purpose or objects in maintaining these records are as follows:
1. Accounts of progress kept in an orderly way:
If a patient approaches a doctor, it is usual that the patient’s past history is needed to diagnose the disease properly. In the same way, to measure the progress of the concern or to find out certain other facts, a history of the firm is needed. And the past records, history of the business, recount the dealings.
2. Proper study of the position of the firm:
Records of past transactions are the basis on which further study can be made. The preserved records are the contributory factors, without which a good and proper study of the position of the firm cannot be made and a statement cannot be prepared.
3. Comparison of business (period wise/state wise):
Past records make it easy and possible to compare the performance of one period with that of another period, one place with another, one result with another, etc. By comparison, one can know whether there is progress or not.
4. In case of disputes:
The need for referring to these records or documents often arises for the settlement of disputes in transaction. All information cannot be remembered.
5. Policy making:
Past records, events, progress, etc., are very necessary to decide future policies and plans. In the absence of records, the policies and plans may not be successful.
6. Legal requirements:
Certain records are to be kept for a number of years from the legal point of view.
Records are good evidence in the court of law, in the case of suits.
8. General use:
Some customers may simply refer to the previous correspondence by quoting the number and date. In such case, if the letters have been filed properly, it is easy to comply with the needs of the customers. Otherwise, there is wastage of time and money.
9. Facilitate to detect errors and wastes:
Past records help in locating the errors and identifying the wastes occurring in the organization. Thus the management can eliminate the errors or wastes.
The past records are just like tools in the hands of a technician. They enable the management to promote the business by making a thorough study of them. Filing is one of the main functions of a concern and the filed records must be readily available when needed. There are no hard and fast rules by which the documents are to be filed.
The system and method of filing will generally depend upon the size of the office. The importance of a good filing system cannot be exaggerated in the modern days, when there is stiff competition among the firms. Filing is the systematic arrangement of keeping business correspondence and records which enable quick reference whenever needed in the future.
Records are written data that are made for possible future use. The records may be classified into:
1. Personnel records.
2. Correspondence records.
3. Accounting records.
4. Legal records.
5. Other business records.