In every organization, there is at least one person who fits the definition of a perfect geek. This person is always engrossed in paperwork. Occasionally, this person would be punching numbers on a calculator or scribbling figures inside a massive over-sized black-colored ledger.
Well, this is the accountant of the firm. Despite their humble demeanor, accountants are perhaps essential persons within any organization. They know the exact financial situation of the organization at any given time.
Accountants tell the senior management where the company is going –either it is making profits or incurring losses. They let them know if the cash position of the company is sustainable. Nowadays ERP accounting software is available which is now viewed as an essential part of the business world, as it will make your work easy and remove the hassle of data entry and integrate seamlessly with different accounting apps. It is a better and reliable option as it will not only processes data and creates reports much faster than manual systems, but also allows faster data entry.
Accountants prepare budgets and make sure that the company does not stray from its financial path. They are the brains that keep the business running profitably.
What is Accounting
In straightforward words, accounting means recording, analyzing, and reporting financial transactions. But this is not all. Accounting also involves preparing periodical financials of the company for the information of the shareholders. You can gain further insight into the subject of accountancy by clicking the macc online link.
Accountants do not merely provide numbers to the management and the shareholders. They also analyze those numbers and prepare comprehensive reports based on them. Senior management takes business decisions based on these reports.
How Accounting Helps in Business Growth
There are several ways in which accounting helps in business growth:
Cash Flow Management
The financial well-being of any business depends on the way it manages its cash flow. If a company is recording lots of sales on accounts receivable, it will end up with no cash to run daily operations.
One of the fundamental aspects of any business is getting paid for goods provided and services rendered. Countless others involve paying and receiving money. The accountant tells you how much cash the company has at hand, what are daily its operational requirements.
Managing Accounts Receivables
The accountant – or accounts department – records all the accounts receivables in the ledger appropriately with their maturity dates. They would let the management know which invoices are due so that recovery teams start following up for payment.
Inventory is one of the most important aspects of any business. Adroit inventory management would mean the difference between the success and failure of your company.
The accountant maintains an up-to-date status of business inventory. This status report shows which items are selling in more quantities, which items are stagnant, and what orders are imminent. The accounts team also conducts snap audits of the warehouse and ascertain if all the things within the report are physically present.
Planning and Projections
By default, every business is a going concern. It involves preparing for the future and making informed decisions in the present.
An accountant is also responsible for preparing future projections of the company based on its current performance, and future trends. He/She would take a few realistic assumptions and make projections for senior management.
The management plans its future course of action, keeping these projections in mind.
There is simply no escape from taxation if you are running a successful business. An able and experienced accountant makes the taxation procedure simple and easy.
The accountant has complete records of all the company’s financial transactions. He/She can easily prepare the reports required by the taxation authorities. The accountant also has proof of all the sales in case the regulator wants to check them.
Most businesses require loans for various purposes. The requirements for securing these loans are lengthy and cumbersome.
An accountant knows these requirements and completes the documentation to the satisfaction of the lender.
Accounting and Economy
Accountants have a vital role in the growth of an economy. Identification and proper management of resources are necessary for economic growth. Cost reduction is also a crucial element.
Accountants are responsible for all the corporate reporting within any country. It leads to the transparency of financial matters. It further helps the authorities in mobilizing and properly channeling investments.
High-quality and transparent financial reporting leads to investor confidence. Foreign investors are encouraged to put their money into the economy, knowing that it will be safe.
High standard accounting practices discourage corruption within any economy. It also hampers the mismanagement of funds. International buyers are more interested in placing large orders where a sound and prudent financial infrastructure is already in place.
Contrary to widely-held belief, accounting is not merely about crunching numbers. It is the branch of science. Accountants are very good at their job. They carry the entire financial burden of the company on their shoulders.
Senior management and shareholders trust their accountants to provide them with the most comprehensive assessment of their company’s financial position at any given time.
Accounting reports serve as a roadmap to business growth. They ensure the equitable distribution of resources without wasting any of them. In short, accountants do not help their companies only, but the entire nation.