Once perhaps thought of simply as drudgery and relegated to the “back office” of most businesses, accounting has strongly stepped onto “center stage,” due in part to the increasing role of data analytics. Accounting is more than keeping records and providing a “scorecard” to measure how a business is doing.
Why Accounting is Important
Accounting plays a crucial role in running every business. Accounting provides vital information to the stakeholders of a business by measuring and summarizing its financial activities. Business managers need financial data provided by accountants that is both timely and accurate, helping them make good decisions. Accounting data is gathered, processed, and used to:
- Make decisions about company operations, including data regarding accounts receivable, inventory levels, sales, assets, liabilities, profits, and cash flow.
- Provide data for planning and budgeting.
- Comply with state and federal reporting and tax requirements.
- Provide cost accounting data regarding products and services.
- Provide information for external users.
- Provide data that contributes to making “what if” decisions and formulating business strategies.
Why Data Analytics Matters to Accountants
Data analytics matters to accountants because as “data scientists” they have access to data and can use it expertly to help each business.
Data analytics is used by accountants to make a “deeper dive” into the numbers. Data analytics is used by accountants to uncover insights that can improve a business’s success rate, enhance its efficiency, and better manage its risks. There are four types of data analytics. First, descriptive analytics help examine what is happening inside the business. Second, diagnostic analytics help identify why something happened. Third, predictive analytics that can help identify what can happen. And fourth, prescriptive analytics can help determine what should happen to the business.
The Role of Data Analytics in Accounting
The increased role of data and advances in data analytics means that accountants can provide deeper and broader information and insights into a business’s operations and financial conditions. It can help provide better predictions of market and industry trends. And it can facilitate the automation of routine accounting tasks that result in increased accuracy and reduced accounting costs. Data analytics allows testing and iteration of results that can be used to gain better business insights.
Data analytics can facilitate better data-driven audits, improved risk identification and risk management, improved real-time reporting, and it can enhance the efficiency of investments, mergers, and acquisitions.
Data analytics utilizes advanced data collection techniques to help companies capitalize on data. It leverages advances in computing power and cloud storage, and bigger data sources including data from internet sources, social media platforms, and government sources. And it utilizes data infrastructure that makes it easier for data specialists to collect and process data.
The Benefits of Hiring a CPA for Your Business
A CPA will know how to expertly gather data and apply the data to the functions of comprehensive bookkeeping, management of business assets, minimizing business costs, and assistance in filing taxes. A CPA will deliver reliable accounting systems, help achieve better cash flow management, minimize taxes, and deliver a smooth IRS audit if that occurs. A CPA will also help achieve and manage business growth.
Get Expert Accounting and Financial Assistance
Contact Doerhoff & Associates, CPA, based in Jefferson City, MO. We provide comprehensive business and accounting and financial services. Our bookkeeping, payroll, and accounting services streamline and strengthen your processes. We provide what you want and need to fill gaps and support your growth.
