Finance and Accounting – Change of Role Needed in Growth Story of Business Entities

Finance and Accounting – Change of Role Needed in Growth Story of Business Entities

Finance and Accounting have traditionally been identified as leaders in providing information for the management of performance of various business organizations. Things are changing with time and the pace of such change is growing now a days. The old ways of accounting, auditing and reporting is fading away with the increase in automated data analysis and compliance management tools. With AI growing at a rapid speed, Financial Statement Analysis is becoming easier and it helps in time management too.

 

MANAGEMENT PERSPECTIVE

Management accounting is becoming more important and with great evolution can cater to the business decision-making needs. The management has become of the view that the accounting and compliance section of the business is an important part but pays greater heed on long term projections and plans (picking up new projects and ideas) which can help businesses grow at a lightning speed. Management needs information where there is value creation involved. The perspective provided by financial accounting system generated reports (MIS) is losing its significance and the management is keener towards future growth plans. The management has shifted from traditional accounting to growth and strategical plans. As rightly said by Robert Frost – “The afternoon knows what the morning never suspected.”

 

CAPITAL MARKETS OUTLOOK

Financial reporting and auditing are not completely moving towards a dead end. On the contrary, capital markets rely on the trusted information and the future information gets priced in beforehand usually. The valuation the company gets is based on projected financials keeping in view the time value of money. Finance and accounting knowledge can only help in knowing the financials in a better way to the investors but taking a call on whether to invest in a company or increase/decrease the exposure, the projects in pipeline play a big role.

ROLE OF Accountants NEED A CHANGE?

The role of accountants in an organisation does not contribute much to the performance management and growth of the business. The traditional roles must be adapted to maintain and expand the role of the profession. The accountants need to continue their influential role as advisors to senior management and at the same time they need to focus more on supporting the decisions of managers and employees throughout the organisation. This could involve financial modelling, new projects, financial projections, surveys and meeting other management level objectives. Chartered Accountants can play a big role here and the scope can be widened to a greater extent. Financial Statements Analysis through Financial Ratios can help in improving the ratios wherever needed and proper planning towards Working Capital Management, Project Management and Capital Budgeting can be done.

 Planning and Forecasting, Integrated Performance Analysis, Budgeting etc. – These terms may sound traditional but the perspective is modelling the non- financial drivers of the business and markets that can be influenced to drive business performance. As a game changer, the accountants can perform two roles – traditional accounting and financial planning as part of team to enable organizational success and ensure growth.

KEY FOCUS AREAS

  1. Financial Modelling Accountants need to create financial models beyond the traditional financial accounting model which would help in strategies, tactics, and decisions to be analysed and prove to be a way ahead for the growth of the business through new business ideas and projects.

  2. IT & Infrastructure – Traditional Accountants need to be well-versed with technological developments in enabling digital tools and software implementations to ensure the growth of enterprise in a rapid pace and in a systematic and automated manner.

  3. Skillset & Talents – Accountants through their knowledge, skills and experience should look forward to more involvement in the operational resources and processes. Developing these skills will enable the management to think in a broader perspective and focus on the growth story of the organisation.

  4. Innovation & Creativity –Traditional method of accounting and finance was associated with internal control, financial reporting and auditing but new mind-sets must focus on creativity and innovation. Bringing new business ideas and thinking out of the box play a big role in today’s business environment and may act as a game-changer.

To Conclude:

The profession needs to move at a faster rate to define a new highly valued and respected role in the business environment for today and for the future. A supernormal growth in an enterprise requires doing extraordinary things, finding new avenues to contribute to performance and defining and embracing new roles and skills. The finance personnel must think themselves to be an important part of the organisation and contribute to the new business ideas of the organisation. Time Management is also one of the important factors in the growth story of the business entity along with the game-changing role of traditional accounting. In such a competitive environment, companies need to adapt and the accountants must broaden their horizon in order to survive and succeed in the long run.

 

 

 

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Reach us at https://taxmantra.com/business-maintenance/ or Call/WA us at +91-9230033070 for any support/query/feedback.

 

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