Finances are the backbone of any business. Effective handling and utilization of financial resources provide the breeding grounds for businesses to grow. A competent and skilled accountant helps a business exercise better control over all financial matters, make the business more efficient, and improve productivity.
Importance Of An Accountant
Accountants are not only great “number magicians” and bookkeepers but also true leaders, financial advisors, and strategists. They add value to businesses outside of the systematic and detailed recording of financial transactions and assist businesses in growth prospects.
However, many people have a misconception about the role of an accountant in an organization. People often relate it to mere bookkeeping of financial transactions, but the two are not the same.
Accountants play a vital role in effective and efficient business functioning. They help businesses get an insight into revenues and expenses, ensure regulatory compliance, and provide essential financial information to all stakeholders within and outside the organization. An accountant allows better cash flow management and effective implementation of strategic planning through streamlined financial operations.
How To Thrive As A Successful Accountant?
To be a successful accountant, an individual must be well aware of the significance of this role for an organization. An accountant is responsible for generating key financial statements like balance sheets, income statements, and cash flow statements to give a clear picture of a business’s financial position. Therefore, you need to fulfill all the requirements to be an accountant before choosing accountancy as your career.
Various fields of specialization in accounting determine the type of accountant you want to become, like a public accountant, management accountant, forensic accountant, government accountant, etc.
How Accountants Help Businesses Become More Efficient?
Almost all businesses seek professional help from accountants, right from business startup planning to effective business functioning and growth. Here is how accountants help businesses become more efficient and competent:
- Business and Financial Advisors
Public and management accountants are exceptional financial advisors, particularly when a business requires long-term strategies and business planning. They are capable of researching market conditions, forecasting changing market trends, and assisting you in making well-informed, data-driven decisions. Accountants are great business advisors when formulating effective strategies to improve business efficiency.
- Business Growth
When financial accounting is handled well by a professional accountant, a business can get a clear picture of its financial position. The availability of critical data in financial reports allows a business to make informed decisions regarding upscaling and growth.
- Evaluate Business Performance
Financial reports and transactional data speak of a business’s performance. Accountants help you interpret the financial records, evaluate business performance, and assess how well the business has aligned with its goals and predictions. These performance evaluations are important in monitoring revenues, expenses, production overheads, and fund requirements. Performance evaluation also includes a comprehensive review and comparison of business achievements with previous years to identify how much the business has flourished during the current fiscal year and discover the potential for future growth.
- Regulatory and Reporting Compliance
Businesses are subject to certain regulations, and compliance is essential. Financial reports and business processes must be commensurate with the government rules and regulations. Any mistakes or failure in complying with these regulations is potentially damaging to the business.
Accountants ensure that a business is following government regulations. They ensure that important reporting and submissions, such as W2 submissions, annual financial reports, tax filings, etc., are done within the set timeframe.
- Minimizing Tax
Accountants assist businesses in avoiding excessive taxes and, at the same time, protect businesses from defaulting due to underpayment of business tax. They know the appropriate methodologies to reduce taxes and develop tax-efficient strategies to maximize earnings legally. They can minimize tax deductions by taking advantage of tax exemptions, seeking government incentives, and keeping all financial information updated.
- Helping in Audit Procedure
Many businesses take help from their accountants to perform internal audits to keep track of their financial performance in achieving business goals. Internal audits done by the accountants help businesses prepare for a statutory audit or external audit.
Businesses above a certain size must undergo a statutory audit each year. Business accountants help a business through this audit process by providing required financial data to the external auditor.
- Cut Down Overhead Expended and Save Money
An accountant helps save money in a variety of ways. Cash flow management helps an accountant analyze overhead expenses and waste of financial resources in certain areas. This allows businesses to cut down unnecessary spending, reduce production costs, save money, and yield a greater return on investments.
- Cash Flow and Financial Forecasting
Managing cash flows is one of the major business processes in any organization. An accountant ensures the availability of ready cash and strengthens the cash flow process to protect against potential risks. A positive cash flow of any business builds the trust of investors and other stakeholders.
Financial forecasting works hand in hand with a business’s cash flow throughout a fiscal year. Accountants help you assess the flow of money in and out of business. Cash flow projections by a professional accountant help draft budgets and financial forecasts to estimate cash flows, annual growth rates, and profit or loss.
- Acquiring Funds
Every business goes through certain circumstances where they need additional funds. Whether a business is planning to acquire new loans or going for debt consolidation, an accountant proves to be exceptionally valuable in securing finances from investors, banks, and other sources.
- Bookkeeping and Financial Reporting
This is the basic task that all types of accountants can perform. A business must keep accurate records of financial transactions and cash flows to ensure the smooth functioning of the business. Accountants ensure efficient bookkeeping and timely creation of financial reports to fulfill legal requirements.
During bookkeeping, a professional accountant may come across many ways to improve business processes and financial management.
The increasing competition in the global marketplace requires businesses to handle their financial resources effectively and efficiently. An organization’s performance is measured in tangible metrics and monetary benefits. An accountant has a pivotal role in enhancing organizational performance and adding value to the business through knowledge, consistency, and competence. Participation in financial business processes improves cash flow and profitability, pinpoints overhead expenses, and streamlines processes to meet business objectives.