All businesses need to systematically record their financial transactions and cash flows to maintain transparency. Aside from governmental regulations and taxation, the financial recording is crucial to maintain and expand profitability.
An accountant plays an instrumental role in running a business by tracking all income and expenses. A trained accountant allows a business to ensure its statutory compliance and conducts insightful financial forecasts. Accountants collect quantitative financial data and derive valuable insights to apprise investors, executives, and shareholders with transparent facts and figures. They ensure the liquidity of a business by reducing expenses and making insightful projections.
Accountants maintain accountability of every cent spent by business and set financial targets for a firm’s profitability and growth.
Below in this article will walk you through the significance of an accountant for a business organization.
1. GENERATING FINANCIAL STATEMENTS
Accountants record all financial transactions and generate critical financial statements for all stakeholders. They prepare an income statement to establish loss and profitability and a balance sheet that tracks a business’s financial positioning. Accountants also generate cash flow statements to track income and expenses.
A business must maintain up-to-date and transparent financial records to track their performance and ensure compliance. These financial statements ensure that every dollar spent and earned is accounted for; accountability is crucial to maintain profitability, curb losses, and track a business’s performance.
2. EVALUATING PERFORMANCE
Businesses rely on accountants to track their financial records and evaluate every product portfolio or business department’s performance. Both small and large companies need to assess their business’s performance, product offerings, and marketing campaigns.
Accountants prepare financial records that reflect every operation conducted by a business. They map out the financial position and scope of all activities to establish their profitability and track losses. Becoming an accountant opens up numerous career paths for an individual and gives enterprises opportunities to rely on financial data to support decision-making.
They clean up and maintain updated records to track all margins, debt, and expenses to ensure accurate budgeting. Without an accountant, it can be increasingly challenging to track debt costs and ensure taxation compliance.
3. SUPPORTING REAL-TIME DECISIONS
Every business decision leads to a series of implications or consequences, which can be profitable or result in losses. An accountant prepares financial data and forecasts to support business decisions. For instance, if a firm deliberates acquiring talented professionals or moving into a bigger office, an accountant will prepare forecasts. These forecasts will calculate the potential benefits or implications of the decisions.
Accountants act as financial advisors to support decisions related to expansion or cutting back. They assist executives with budgeting and closely monitor cash flows to avoid financial hurdles or overwhelming obligations. In case of a lack of profitability or financial hurdles, they inform the management ahead of time.
Lack of accurate budgeting and inaccurate future projections can break a business, for financial records define success and profitability. Accountants prepare insightful financial predictions using real-time data to give structure to the business’s goals and ambitions.
Accountants maintain liquidity and help firms stay afloat by efficiently managing their profits and liabilities. Management and executive leaders collaborate with accountants to make evidence-based and data-driven decisions. This consultative relationship is crucial to undertake decisions for expansion and growth.
4. ENSURING STATUTORY COMPLIANCE
Ensuring statutory compliance is crucial for all businesses, and certified accountants are well-versed in the laws and regulations. Statutory regulations tend to vary based on the region and corporate compliance protocols. As an entrepreneur, it can be challenging to keep track of statutory compliance. An accountant can maintain accurate accounting processes and ensure the statutory compliance of a business.
Accountants set up accounting processes to accurately address all liabilities of a business. These liabilities include pension funds, income tax, sales tax, VAT, and others. Companies must submit all the financial statements in relevant government departments, while others need to file data on stock exchanges. Businesses strive to avoid legal trouble and taxation hurdles by hiring competent and certified accountants to entrust these responsibilities.
No one can deny the significance of an accountant; they have countless other functions with an organization. The crucial responsibility of maintaining and tracking profitability are on their shoulders. They issue warnings to prevent substantial losses and put forward projections to reduce expenses and drive growth.
Regardless of the business industry and nature, an accountant is an indispensable professional to support sustainable profitability. Skilled and experienced accountants can explore numerous career paths across multiple industries and governmental organizations.