Many of the key players in your business organization are quickly identifiable. The owner, executives, managers, and project leads. These individuals make pivotal decisions that affect future business outcomes. They make sure work gets completed on schedule. They interact with stakeholders and clients, keeping them apprised of company performance. Their contributions are significant and highly visible to every member of the organization.
These key people depend on accurate company data to inform their decisions; much of this data comes from your accounting department. While much of the work accountants perform happens behind the scenes, the information they provide is essential to making wise and prudent business decisions. Hiring and retaining skilled accountants on your team will enable you to find ways to outperform the competition and achieve your goals.
The Roles of Accountants
While often portrayed as number-crunchers, the breadth and depth of an accountant’s responsibilities extend far beyond tracking and reporting numbers.
Create Financial Statements
Accountants regularly prepare financial statements that reflect economic activity across the organization throughout the preceding fiscal period. These financial statements include an income statement, balance sheets, and a statement of cash flows. Together, they provide a snapshot of the company’s income, expenditures, equity, and assets.
Not intended for use by the organization, these statements provide information to outside parties, including investors. Accurate financial statements demonstrate whether or not a company is profitable or able to cover its liabilities with its current assets. Healthy financial statements reassure investors and increase a company’s likelihood of securing future funding.
Unfavorable findings can show company leaders where to make changes to avoid future financial distress.
Ensure Company Compliance
Financial rules and regulations for businesses vary by industry and company status. For example, publicly traded companies must regularly provide up-to-date financial information. This information allows investors to make informed decisions about which companies they want to invest in. Failure to disclose the proper information by established deadlines can have legal consequences for the organization. Missing deadlines or misreporting data can also cause investors to lose confidence in the company.
Likewise, accountants are responsible for the accurate and timely submission of tax returns and data to government agencies. When a company gets audited, they can work with auditors to verify information and correct any errors uncovered during the audit. Their financial expertise lets business leaders focus on business matters, knowing financial obligations are being met.
Advise on Budgets
In addition to tracking expenses and ensuring liabilities get paid, accountants are masters of analyzing financial data. They use information about past performance to predict future outcomes to maximize profitability. A skilled accountant can determine:
- Which projects or initiatives bring in the most revenue?
- What type of advertising is the most effective?
- Which products are selling the best?
Determining which products and services have the greatest return on investment can help companies maximize profits.
Accountants may also compare the income generated by branches or departments within the organization. Identifying low-profit areas of the company can lead to discussions about the best way to increase profits. In some cases, this could mean offering more training to team members or replacing antiquated equipment with newer models. In others, the best approach may be to downsize or pivot to a different approach. All these business decisions hinge on the findings of the accounting department.
Help With Forecasting
Without data, predicting how the company will perform over the next year or five years can feel like trying to pin the tail on the donkey blindfolded. Luckily, business leaders don’t have to try to do that. Accountants can often predict business outcomes with some degree of certainty based on past performance and the outcome of similar situations.
Data analysis can reveal trends in many areas, including customer behavior, supply costs, and market demand. It can help businesses avoid investing in a product or service that data indicates will not sell well in the coming year.
Research and development of new products can be costly and time-consuming. Recouping costs spent can take years. Before spending money to develop a product, ask your accountants what past numbers tell them about how this new product will likely perform or whether there is a large market to recover your significant investment.
Planning for Growth
The timing of purchases and other business decisions can significantly impact your bottom line. The end of your busy season may not be the best time to upgrade your production line if you don’t need the upgrade for the next nine months. Likewise, stocking up on supplies at an all-time high may not make sense. Accountants can help you analyze fluctuations in sales and demand and incoming revenue. Their expert advice can enable you to identify the best time to make purchases. They will also assist with financial planning for economic downturns that could potentially disrupt your business if your cash flow dries up unexpectedly.
Hiring the Right Accountants
Data from the Bureau of Labor Statistics indicates that many highly skilled accounting professionals have left the industry since 2019. According to a December 2022 article in The Wall Street Journal, there has been a 17% decline since 2019. While this statistic alone is not alarming, the demand for accountants continues to grow. The Bureau of Labor Statistics job openings for auditors and accountants will grow 6% from 2021-2031. These statistics show the difficulty companies nationwide will face in hiring accounting and finance professionals for their business.
Established Utah recruiting firms can assist organizations with hiring the best accountants to fill out their teams. They know what skills accounting professionals should have and can help business owners identify the best candidate for their company. Their network of finance professionals, who may not even be looking for a new position, can be a great resource. Your accounting team could be the key to a banner year.