With the recent news of an early-morning fire that heavily damaged several small businesses along Cambie Street in Vancouver, it is important to revisit the need for insurance and record keeping. As discussed in a previous blog posting, insurance is an important is often neglected as the benefit isn’t there until something costly happens.

Who is this for?

  • Small Business Owners

  • Entrepreneurs

  • Business Owners seeking Insurance

Keep reading if you’re…

  • Concerned about your ability to submit records in the event of a proof of claim

  • Storing hardcopy and softcopy records on-site without off-site backup

  • Lacking contingency planning and would like a way to track itemized assets

TLDR: If you don’t want your data to go up in smoke, keep invoice copies and accounting records in the cloud. Make sure you have a itemized list of assets complete with vendor name, date of purchase, items purchased, amount, payment date, and invoice copy. Good records can help determine your insurable needs and it will make sure the claims process goes as smoothly as possible.

Storing Records in the Cloud

There are many benefits to storing accounting records in the cloud, but we’ll focus on the benefits for insurance. Even if your location was damaged, there is no damage to your cloud-based accounting records. Those records are stored in secure data centres with redundant servers and often in multiple locations. There are backups and likely backups to the backups. IT infrastructure that small business can only dream of.

Ricardo de Guzman Jr, President of Excel Insurance Brokers shares the importance of record keeping in the insurance process.

Any interruption of business can be financially devastating. In the event of a claim, the onus is on the Insured business to prove its loss. So it’s imperative for businesses to keep up to date records of not only their property values but also their financial data. Keep in mind that it’s not just about the physical assets lost, but also the possible reduction in revenue and increased expenses associated with the loss of those assets.  Storing such data securely off-site, preferably in the cloud, can help to expedite the claims settlement process helping owners replace what they’ve lost and get back to business as quickly as possible. 

Benefits of Good Record Keeping

  • Continuing to Operate: Even if your business suffered damage, you’ll need to continue operating. Being in the cloud means your accounting system remains functional and you can carry out tasks like payroll, paying yourself and suppliers, and perhaps pay for expenses such as emergency restoration and contractors.

  • Knowing your Replacement Value: Assets are insured at replacement value, meaning the original cost to replace the damaged assets. So what happens when you spend a bunch of money on equipment and leaseholds and don’t know the actual cost and insured a ballpark number instead? By maintaining invoices and payments in the accounting system, you’ll have detailed listing of your assets to insure and not leave anything off the table.

  • Contingency Planning: Few organizations have a contingency plans to get up and running in the event of damage. Your recollection of assets are hazy as they have been acquired long ago and over many years. So what happens when you need to rebuild a site or re-install equipment? Do you still have all the vendors, contracts, and contacts? With records stored in the cloud, that information can serve as a basic contingency plan.

  • Establishing Proof of Claim: Having detailed records will justifiy your claim and speed up the settlement process. When you need to prove the list of damages, it will be handy to have a itemized list of your assets complete with:

    • Vendor name

    • Date of purchase

    • Items purchased

    • Amount

    • Payment date

    • Invoice copy.

  • Determining your Business Losses: Sometimes a business may have not suffered significant damage to assets, but instead lost significant revenues from being shut down which may be covered by Business Interruption insurance. But you’ll need to prove the sales and profit generated in that same time period if there was no incident. Are you stuck with non-existent and at best, inaccurate financial information? If asked, can your accounting system prove the average sales lost in a day or week for a specific location? Having records in good order will insure any claim goes as smoothly as possible during this stressful period.