What are the roles of accounting in business? Is not accounting one of the backbones of a business? Without it, your business can run without a clear direction. Your business may currently benefit from increasing profits, but without clear and definite financial management, where it is regulated in the field of accounting, it is only a matter of time until the results of these benefits leave no benefit for your business.
It can be said that accounting “disciplines” your business finances so that they are always neatly organized, both in terms of income, expenses, losses, profits, and so forth. You can contact the accountant Norwest for the best accounting service.
However, what exactly is the role of accounting in business? Here are the 4 Roles of Accounting in Your Business:
Provides Financial Information and Answers
The most basic role of accounting in business is, of course, its ability to provide various information and answers related to all kinds of financial activities. All financial related data will be recorded in the accounting system, making it easier for you and your employees to measure the condition of the company. For that, you should arrange your books and regularly update the data. This will be easier to do if you use special software that has implemented a cloud system. That way, every employee or accounting team can access accounting data in real-time whenever and wherever they are.
Financial Control and Control Devices
Through accounting, you can find out all financial related data. From that data, what information did you get? Has it turned out that the company’s profits have increased in recent years? Or instead, it has decreased? Have all clients made payments on time? How much balance do you have now? The information indirectly places accounting as a financial controller and controller. Through identifying the financial information obtained, you can conduct an evaluation or assess the performance of your business so far.
Helping Stakeholders Make Decisions
Thanks to the results of the identification and evaluation of financial information, stakeholders or shareholders can make decisions. This makes perfect sense given that stakeholders cannot invest without up-to-date and accurate financial information. In this case, it is the accountant who prepares all the relevant information. More importantly, accountants must also ensure that stakeholders understand the financial data provided by the company. Both parties must work together to use financial information to deal with various problems in business.
Connect with third parties
From the various explanations above, there is one point that needs to be highlighted, that accounting is not always related to the internal domain of the company, but also to third parties outside the company. Stakeholders might be one of them. However, accounting, more precisely the accountants, can be a bridge to deal with vendors or other third parties. Based on company financial data, the accountant can decide whether the price is reasonable or not. Not only that, but an accountant can also be a liaison between the company and the government to pay taxes and auditors.
Thinking about finances alone is not enough to guarantee the company’s future. You also need to be able to identify and analyze the financial data obtained, then process it to then be used as a basis for further decision-making considerations.