People used to believe that accounting is concerned only with the recording of business events. However, this perception has become completely obsolete recently.
Over the years, the role of accounting has changed radically. Today’s accountants either have or must take on the role of a consultant. In crises, shortcomings that stay hidden during regular times rise to the surface, which clearly shows that many companies are facing serious challenges when it comes to their financial and accounting functions.
So, what should managers pay attention to when choosing or changing their company’s accounting firm? And what does our accounting firm offer you?
It is impossible to make the right decisions without foundational data
Good accounting is essential for the efficient operation and operation of any business, as timely, accurate and relevant information is the foundation for making decisions. Volatile situations often reveal issues for many companies when it turns out the management does not have the right data and lacks the information needed to make confident decisions about the next steps. These challenges stem mainly from a distorted view of the role of accounting.
Many businesses still see accounting as a service whose job is merely to record data. However, the truth is that accounting is a key business function that helps businesses make the best decisions based on real-time data. At the same time, internal accounting functions also cause their share of issues. These functions have been present in companies for many years and are consequently accustomed to the same way of working, making it very difficult for them to respond to rapid changes they are not prepared for.
Tip: During the good times, it might seem that the accounting function is not delivering much added value. However, just because a company manager does not have problems with accounting it does not mean that the latter is effective. Every business owner should review the state of their accounting, monitor it and understand how its processes are organized.
A shift in understanding – moving from recording data to an advisory role
One of the most important points is that the role of accounting is essential and truly invaluable, especially in crises. Companies and their managers need business support from accounting to shape their strategic thinking and set goals for the development of their company.
Businesses are increasingly turning to accounting consultants for vital business advice and support when managing business downturns, optimizing operations and costs, navigating through complex government programs, and obtaining assistance.
Managers recognize that accounting consultants deliver value by offering advice and encouragement that helps them navigate the unknown, facilitate growth and search for solutions. They also play a key role by supporting companies in restarting and adapting their business models.
Tip: Managers need to establish a trust-based relationship with their accounting and include the accounting function into their operational and decision-making processes. The failure to involve the accounting function is mainly reflected in lost opportunities for business process optimization, savings and elimination of potential irregularities before they occur.
No cash flow strategy
Many companies also face liquidity problems, which only materialize in a crisis.
The accounting department should work with the management to prepare a list of practical measures that the company needs to introduce to improve liquidity and outline several different response scenarios. For example, the scenarios should cover how long can a particular company survive given the current state of liquidity, how long will it survive if it implements a part of the measures, and how long if it implements other, more radical measures.
In these situations, priorities need to be chosen based on the set scenarios. Our accounting consultants guide companies in their negotiations with creditors, suppliers, and banks, when they lay off workers and when they look for new cash flow solutions, etc.
Tip: Management should work with accounting consultants to develop a cash flow strategy and come up with various scenarios that will help them avoid unforeseen situations. A company is like an organism – without a timely diagnosis, the management cannot decide which is the right cure to use.
We advise managers to review their accounting organization and related processes. Do not wait for problems to arise and force you to start looking at your processes.
Accounting should provide up-to-date, accurate and relevant data to make sure operations based on them are efficient, digitized, fast and of high quality.
If managers realize that they do not currently have access to a comprehensive service, they should not remain loyal to their suppliers just because they are concerned about their sensitive business information or fear disruption to their operations. Any change must be organized in such a way as to make sure the company does not experience any interruptions.