Business accounting is not something that a company’s leaders can shuffle off to the “bean counters” in the back office. No, it’s a critical business function that is key to every company’s successful business strategy and operating results.
Why Accounting is Important
The accounting function is important, even crucial because it helps keep a business and its financial records organized to share with stakeholders including investors, lenders, and employees. It provides the tools to evaluate a business’s performance, including information regarding expenses, revenues, debt, and gross margin. It helps a company stay within the law including the vital aspects relating to taxes. It provides the ability to budget and forecast future expenses. It helps a company avoid time-consuming audits. Accountants are experienced in dealing with complex taxes, large amounts of money, and other critical financial matters. Accounting improves an organization’s decision-making. It helps a business get more deductions. It saves an organization time. And it makes all its financial processes including business strategy easier.
What is Business Strategy
Business strategy is the combination of plans, actions, and goals that define and guide how a company will compete in its marketplace and address the needs of its target customers. And given that today’s business conditions are not the same as five or ten years ago, a business strategy must be anchored in current research and must be adaptable to today’s conditions.
A good business strategy must include the elements of a strong and purpose-driven management team, a leadership vision, a developed company culture, and a strategic marketing plan. It also requires long-term goals, financial objectives, operational objectives and action plans, effective operating systems, and all the tactical resources needed to achieve success.
How Does Accounting Relate to Your Business Strategy
Accounting, wisely and properly used, becomes strategic management accounting. It includes the processes of obtaining and analyzing financial information to help a management team make strategic decisions and analyze corporate effectiveness. That includes strategic decisions in areas including market development, product development, pricing, and mergers and acquisitions.
Some of the tools that can be utilized include:
- Setting financial goals.
- Target costing.
- Customer profitability analysis.
- Life cycle costing.
- Competitive benchmarking.
- Value chain analysis.
- Workflow analysis.
- SWOT analysis.
- Strategic pricing.
- Risk management.
An Accountant’s Importance in Business Strategy
An accountant is far more important to a business than simply completing financial statements and paying bills. An accountant is a key partner in helping develop business strategies and helping a business grow. A qualified accountant can provide expert assistance in developing profitability goals. He/she can collect the right data, analyze it, and shape it into the information that senior leaders need to make good long-term operating and financial decisions. An accountant can help with creating an acquisition strategy. An accountant can provide expert support for financial and operating controls as well as establish risk management practices. Of course, an accountant has a key role in recordkeeping and tax filing and can help take advantage of all possible deductions. An accountant can help manage and balance financial inflows and outflows. And an accountant can contribute significantly to a better managed business structure.
Choose An Expert Accounting and Strategic Management Partner
Contact Doerhoff & Associates CPA, Based in Jefferson City, MO. Every business owner has more to worry about than bookkeeping, financials, forecasting, and payroll. They have the services to suit your needs to support your growth. They can streamline your processes and save you time.
