Successful organizations understand that the accounting department is an essential element of their continued growth and profitability. Not only does the accounting department keep the company’s finances in check, but it can also help shape the direction and future growth of the business. Unfortunately, some accounting departments are understaffed and underworked, leaving employees consumed by processing day-to-day transactions and unable to focus on the bigger picture. If that scenario sounds familiar, consider these ways that growing your accounting department can help grow your business.
Real financial data
On the most basic level, your accounting department is responsible for collecting and organizing financial information for your business. If that data is used only for tax return preparation, you’re missing out on the real value that your accounting department can provide.
Good financial data also allows you to identify trends and make forecasts for the future. Analyzing financial data makes clear whether your company should continue with current product offerings, markets, and strategies, or if you need to make changes to improve results. Being able to zero in on the details and see how they fit into the big picture ensures you are considering both short- and long-term perspectives in the decision-making process.
Improved cash flow
Cash flow is the lifeblood of any business. Your accounting department should be managing credit and collections, ensuring that you are getting paid on time and have the funds available to pay employees and bills.
Timely information regarding what the business is spending, what it is earning, and when funds are available keeps the organization out of debt.
If additional cash is necessary, your accounting department prepares the documentation required for obtaining that financing from banks, private lenders, investors, or venture capitalists.
Responding to shifting needs and opportunities
The financial needs and situation of an organization shift constantly, based on economic variables and results of internal controls. Your organization’s finances are not a “set it and forget it” system. When the costs of materials or service contracts go up, a good accounting department is alert and able to seek out alternatives before they negatively impact the organization’s bottom line.
When the time comes to expand into new markets or products, your accounting department can assist management with major strategic decisions, including staffing needs, asset purchase or leasing, and mergers and acquisitions.
The accounting department bears much of the responsibility for implementing and monitoring internal controls that are designed to prevent fraud. An adequately staffed accounting department ensures “segregation of duties,” making sure that every financial transaction goes through at least two employees. This segregation of duties is a crucial component of fraud deterrence.
Your organization’s success depends on relationships with several stakeholders, from employees to suppliers, bankers, and customers. When your accounting department is functioning well, your relationships with those parties work well.
Because accountants are respected professionals, they often have beneficial connections outside of your organization that can lead to new customers, more strategic relationships with suppliers, or better relationships with lenders.
A company’s finances impact virtually everything else the company does. Your accounts can ensure that the organization recognizes opportunities to grow and weathers difficult economic times. Your accounting department can be proactive, ensuring you are saving on taxes, improving performance, and seizing on the most advantageous financing ideas. So before you seek out growth by hiring for sales, production, or any other department, consider that investing in your accounting department is an investment in your business’ future success.
To learn more about how to optimize your accounting function, check out our Workforce Planning eBook.