When talking about successful companies, people usually tend to highlight their flagship products or business models without taking into consideration all the departments whose hard work set the foundations for these revenue-generating processes.
Accounting is definitely one of these mentions. Doing tremendously hard work in organizing finances, helping organizations to reach their financial goals, and keeping various facets of the business under the same roof, accounting departments make an invaluable part of the broader corporate environment.
However, the business world is evolving at a rapid pace and it is only natural that the methods and the goals of the accounting branch undergo a similar changes to keep up the pace.
So, what is the role of accounting in the modern business environment, and can you use these insights to your advantage? Let us try to find out.
Core accounting duties
Before we proceed to some more nuanced considerations, let us first quickly go through some of the core accounting responsibilities that still make the pillar of this branch and will keep making the bulk of its duties in a foreseeable future:
- Providing income statements and informing the company about its profits and losses
- Providing balance sheets that give business owners a detailed breakdown of the company's current financial position
- Providing a cash flow statement that outlines the amount of revenue generated over a set period of time
- Providing help in creating a budget and future financial projections
- Ensuring the organization’s statutory compliance and ensuring the liabilities like income tax, pension funds, sales tax, VAT, etc.
Running an efficient organization without giving full attention to these critical tasks is near impossible.
Improving the organization’s efficiency and performance
As we've mentioned in the introduction, the business world is constantly shifting, and as time goes by the organizations become more holistic and better integrated. That is why modern accounting usually goes past the core duties and establishes greater leverage over other critical departments. The necessity of keeping up with the deadlines and maintaining the uninterrupted cash flow simply forces the companies to take very good care of CR, invoices, financial performance, and important facets. The stronger this input becomes, the organizations are forced to conduct operations with greater efficiency.
Providing consulting services
The insights gathered by the accounting departments don't have to be left to others’ interpretation. On the contrary, the accounting teams are quickly outgrowing their initial role of sorting out the papers, to a more insightful consulting role that presents owners with invaluable knowledge and guidance. This trend is especially noticeable in the case of third-party accounting agencies like Verus Accountants which have very rich experience in working with various types of companies in different market conditions. This level of expertise and valuable insights is very hard to emulate with in-house accounting teams.
Streamlining decision making
Important business decisions can’t be made without hard data. One of the greatest advantages of the accounting services comes in the fact that this business branch inherently leaves volumes of insightful information that can be used for evaluating any initiative you intend of making. These efforts don’t have to be limited to avoiding basic business mistakes like overspending, under-spending, and plateauing – accounting teams can take purposeful efforts in gathering the data models you need for engaging in more in-depth strategic projections and performing risk management in a much more deliberate manner.
Enabling investments and loans
Running a company without any of these financial assets is practically unfeasible. With that in mind, we should like to remind you that the party you want to lend money to or get the investments from will want to be sure that your company’s finances are in order and that you will be able to use these funds in a productive and beneficial manner. One of the main roles of accounting is to provide the statements and reports you need to get access to these assets. Even more importantly, the accounting teams will keep the finances in line and ensure that you are eligible for these types of funding in the first place.
Backing up tax return claims
Last but not least, it should be mentioned that IRS audits can are some of the worst things that can happen to your business. They slow everything down, throw the employee's morale off the rails, and can potentially even hurt the branding of your company. Because of that, filling tax reports with all due care and diligence should be one of your company's greater priorities. Duties like this as well as reconciling bank statements make accounting one of the important facets of one organization and urge business owners to treat all of its aspects ranging from recruitment to workplace conditions as seriously as possible.
We hope these few considerations gave you a general idea about the importance of the accounting teams, their role in the present-day business environment, as well as the ways you can muster these resources to help and augment other important business processes. But, when all is said and done, the success of one organization depends on its ability to keep track of and elevate its financial performance. That is why all investments you make in this vital sector produce very tangible and beneficial results.