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How Small and Medium Scale Businesses can get a Return on Investments from a Service Accounting Department?

How can businesses optimize ROI from Accounting Department

During the initial stages of business, during the growing phase, the only resources impacting the company’s success are capital and time. Small and medium-sized companies cannot afford to maintain a comprehensive in-house department for accounting and bookkeeping functions. However, as the business experiences increasing trend in its operations and move toward growth, these companies understand the need to have a complete package of accounting and bookkeeping services. 

businesses optimize ROI from Accounting Department

Roles and responsibilities of a complete or comprehensive accounting department

The bookkeeping and accounting staff of small and medium-sized businesses are primarily involved in payroll management, complying with the requirements under tax regulations, and recording all the financial transactions that occur on a day-to-day basis. In such situations, companies often oversee the detailed scope of an accounting department and fail to utilize the resources of such a department optimally. To make the most out of a complete accounting department, it is very pertinent to understand the various positions under the accounting and bookkeeping department and their roles and responsibilities.  

This section of the present article provides a brief about the different functional positions of the accounting and bookkeeping department. 

The primary role of the bookkeeper is related to the transactional level details, such as recording the entries about routine transactions in the books of accounts, processing payables, issuance of invoices for the supply made, and tracking the expenses, revenue, and payroll functions. Bookkeepers can be considered a single point of contact handling the recording of the financial data of your business. Working with the bookkeepers with utmost effectiveness and efficiency is essential for accurate, comprehensive, and timely reporting of the business’s financial statement. For this very reason, the bookkeepers are expected to have insights into the basic accounting standards relevant to the industry and policies adopted by the company.  

Accordingly, the position of the bookkeeper can be construed to be at the base of the pyramidal structure of the accounting and bookkeeping Services department. 

The accountant, more or less, is also associated with the tasks assigned to the bookkeeper, related to the primary management and recording of commercial transactions. However, the scope of an accountant is much broader than that of a bookkeeper, as the accountants are qualified, experienced, and experts in maintaining the overall books of accounts with accuracy, precision, and efficiency. The accountant’s job is to oversee the bookkeeping function, carrying out necessary reconciliations like payroll, bank, cash, etc., to ensure the authenticity of the recorded transactions. Further, the onus of preparing the financial statements (balance sheet, profit & loss statement, and cash flow statement) lies with the accountant. 

Thus, it would not be wrong to say that the accountants are the mid-level personnel in the accounting and bookkeeping department and are responsible for the overall implementation of the accounting policies, procedures, and best practices in the company.  

The controller acts as an intermediary between the Chief Officer and the team of accountants and bookkeepers. The controller oversees the overall financial processes and carries out the necessary management information system (MIS) reporting. The controller is accountable for managing the business’s effective and healthy accounting and bookkeeping department. A controller is an individual who creates the month-end closing schedules and disseminates the business information to relevant stakeholders on a timely basis, which is critical for making the business decision. The task of ensuring the accuracy of the financial reports lies with the controller. Controllers are also responsible for developing internal policies and procedures aligned with international accounting standards and best practices and effectively implementing the same in the company. 

The company’s CFO is the head of the accounting and bookkeeping department, looking after the company’s future. The CFO’s primary responsibility is strategic decision-making after analyzing the financial data and reports prepared by his team of accountants and controllers. His analysis and decisions should be insightful enough to mitigate the company’s economic challenges. The CFO’s fundamental role is to make plans and develop the tactics to induce the company’s sustainable growth, increase the margins, and cut unnecessary costs. 

Benefits of a comprehensive accounting department  

Though many advantages of having a fully-functional accounting department, we will discuss the top six critical benefits. 

Accuracy and transparency around financial information and real-time access to business-critical statistics can help senior management make informed business decisions quickly and more effectively based on factual information. It allows your company’s top management to strategize the growth and expansion plans more realistically. 

A comprehensive accounting department works in favor of your business, as the same promotes integrated technology throughout your business’s operations, managing your resources optimally. It also helps eliminate redundancies, record consistency, make complex data entry easy, and streamline the reporting processes.

Monitoring the cash movements of the most critical business activity must be performed regularly and diligently. Having fully functional accounting processes and systems makes the task easier, as the forecasting of cash flows becomes near actual and tracking of the movement of the cash flows on a real-time basis. It will help you antedate the cash position – whether shortage or surplus, beforehand and allow you sufficient time to take necessary actions to manage the situation. 

Integrated systems promoted by the comprehensive accounting department make access to financial information quick and easy. It, in turn, helps the relevant stakeholders oversee the positions of the company, identify and restrict the fraudulent activities or manipulations taking place in the company, manage the working capital situation, etc. These all improve the ability of the company to foresee any financial challenges or damages that may occur and suggest the best practices to mitigate these risks. 

When the financial records are maintained with accuracy, comprehensiveness, and efficiency, the required reports can be made available to the decision-makers on a real-time basis. The data-driven intelligent reports help the management to decide on the optimal operational strategies, spending, investments, revenue models, etc. Basis, the study of relevant statistics and reports would help them decide whether to continue a particular product, which marketing campaign is yielding the highest results, which unit is performing the best, which expenses to be discontinued, or even to optimize the supply chain. All these decisions would directly impact the margins and profits of the business by either optimizing the revenue or cutting down the costs. 

A full-fledged accounting department supports the measurement of the company’s key performance indicators, backed by factual information. It makes the decision-making process simple and logical, bringing in the benefits of the strategic growth of the operations. It would just not focus on margins; adequate consideration would be given to assets, liabilities, and responsibility towards the environment, workforce, and society. All these would ultimately impact your brand positioning in the market in a very positive manner. 

The Major Setback

As mentioned in the beginning, many small or medium-sized businesses cannot afford to have a dedicated accounting Services and bookkeeping department working at a full scale to take care of their accounting, financial recording, tax compliance, payroll management, and reporting needs. It would lead your business to miss out on financial and economic benefits compared to others relying on comprehensive accounting and bookkeeping services

Final Words

When you cannot develop an in-house accounting department to resolve your problems, then the optimal solution is to get all the advantages of such a team by partnering with third-party consultants and outsourcing the role of your accounting department. Suppose you are looking for a proficient team of professionals focusing on your business growth. In that case, you can consider CFO UAE as the firm to support you, gain you all the benefits of comprehensive accounting service and guide you through the path of growth and success. 

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