An effective accounting system in place helps startups and established companies in:

Planning budget:

Budgeting helps organizations in effectively controlling the income and expenditure of the company while monitoring the managerial policies and goals of the business. It provides a disciplined approach to developing strategies; directing capital and other resources into profitable channels.

Evaluating the performance of the business:

Accounting system acts as a yardstick in measuring the performance of the business with respect to key metrics like net profit, sales growth,

Managing cash flow:

Regular tracking of the money that comes into the business helps in predicting the trends, paying to staff and suppliers, covering debts, etc.

Presenting information to investors and stakeholders:

While approaching potential investors, creditors, banks or borrowers, the financial statements and other reports serve as financial scorecards of the company. Investors will get a better sense of the financial health of the business which includes the net worth, debts, savings, amount spent on fixed expenses. In addition, they will get to know the solvency, creditworthiness, liquidy, stocks and bond issuers of the business.

Mandatory by law:

In India, as the Registrar of Companies demands a strict record of
income tax payments at the end of the year, without maintaining accounts
companies may end up paying tax in excess.