In every business, the financial aspects are handled by its accounts department. This department is responsible for keeping and updating the records of incomes, expenditures, money borrowed and owed, etc. In other words, a business’s economic front is managed overall by the accounting department. It forms an intrinsic part of a business as every company is looking to make profits.
Without proper management of the finances, understanding the finances and adopting profit-making strategies is almost an impossible task. Despite this, the accounting department gets overshadowed by the front-line business operations like HRM, Purchasing, Marketing, and more. However, a successful business owner and a skillful manager knows the importance of a systematic accounting system and adopts every necessary step to maintain it.
The purpose of finance and accounting
Every business corporation needs to record cash outflows and inflows, pay salaries, keep track of purchases, deliveries, and orders, along with assessing the value of the company’s liabilities and assets in order to calculate the overall profit of the company. A lot of functions are managed to accomplish such tasks which are discussed as below:-
The expenses of the company including tax payments, new assets buying like land or machinery, delivery, and purchase costs, updates or repairs to previous assets, and more. The accounts section makes sure that all the records of the payments outstanding and cleared are maintained to avoid financial penalties and errors.
The calculation of salaries and wages, which are payable to the employees is known as payroll processing. This function makes sure that every employee receives fair pay, which includes all commissions, bonuses, and benefits. Apart from this, the accounts department calculates the union fees, income, and social security taxes, and other deductions to arrive at the final payable amount.
The inventory of a company comprises of the complete list of items that a business owns. Over the period of one year, these items in the form of raw materials, finished, and unfinished goods are sold. It is important for the accounts department to accurately maintain these sales to make sure the cash flow is not affected in a negative way.
Fixed assets and property accounting
For a company to function effectively, it is important that it owns long-term fixed assets like tools and equipment, vehicles, machinery, buildings, lands, and more. These fixed assets are not the ones that can be easily converted into cash. The accounts department is responsible for tax payable calculation, along with maintaining a detailed fixed assets record for knowing the company’s overall worth and the potential to buy the latest and competitive assets to boost productivity.
This constitutes of the total cash earned from debtors payments, sales, and other sources. It is important to enter every income source after identifying it in order to balance the total amount against the expenses of the company. Apart from this, outstanding invoices and amounts payable also need to be tracked to assess the annual profit/loss of the company. The bank account reconciliation process helps greatly in this regard.
7 key accounting professionals
1. Chief financial officer
2. Accounting manager
3. Accounting supervisor
4. Financial controller
5. Treasury manager
Top must-have accounting department skills
Entry-level accounting, bookkeeping, and auditing skills
The need for dealing with numbers to solve arithmetic problems with ease makes it a must to have the basic math skills at a place. Doing a math course online or offline is surely a necessity.
In order to ensure accuracy and error-free financial data management, attention to detail is important as a small accounting mistake can lead to a big financial loss.
Huge financial data cannot be processed with math skills alone. It requires the use of software, and this makes learning the use of a computer imperative.
Mid-level accounting, bookkeeping, and auditing skills
Integrity ensures confidentiality to the businesses, and at the mid-level, it is one of the responsibilities which need to be carried on the shoulders forever.
The talent of a business accountant for quick problem-solving, which further leads to the improvement of the company’s workflow requires resourcefulness at this stage.
An ability to analyze information to identify profit potentials and problems, along with spotting financial errors and providing innovative solutions form the basis of analytical skills.
Senior-level accounting, bookkeeping, and auditing skills
Roles at the senior level require you to lead the accounting teams and develop strategies for assessing and reporting monetary information, along with the ability to address the opportunities and risks well.
The understanding of the ways in which the legal laws affect a business’s financial practices is imperative to not only obey legal laws but to conduct financial benchmarking and adopt strategies that benefit a business to the maximum level.
How to upgrade deficient accounting skills?
Accountants’ skills training– Making accountants upgrade their skills to the required levels.
Training alignment-Aligning individuals for every training program for collaborative learning
Cultivating a coaching environment-Coaching programs to exchange knowledge between seniors and juniors
Interactive online learning-Face to face online learning for retaining maximum information
Forward learning– Letting employees forward what they have learned to others
How does a perfect accounting department work?
Creating/Controlling budgets-Make and monitor company budgets by assessing cash inflows and outflows.
Forecasting revenues-Account detailing leads to forecasting revenues and make changes accordingly.
Major buying decisions-Efficient financial management lets you assess risks better and take major buying decisions.
Tracking business expenses-Accounting lets you not only track expenses but also eliminate the unnecessary ones.
Monitoring financial health-Without financial monitoring, it is impossible to assess the present financial position and make appropriate changes.
Keeping error-free records-Accounting helps in keeping accurate records for tax preparers and financial institutions and avoiding fiscal audits.
The above-post concludes that the accounts department forms the backbone of every business. Qualified accountants having appropriate skills in place are a must when it comes to managing the financial records of a company. It not only helps in eliminating any possible financial error but also provides a clear insight into the company’s finances, leading to better risk assessment, realizing and making use of the opportunities for business growth.