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How critical is back-office support for sustainable growth for your business?

How critical is back-office support for sustainable growth for your business?

The company’s back-office functions are as essential as the front-line workers of the company for running the business efficiently and with total productivity. The intelligence of the back-office team plays a vital role in making business-critical decisions and seamless performance of routine business operations. The back-office function does not interact with third parties, such as your business’s customers or suppliers. Still, it supports the front team by taking care of the bookkeeping, accounting functions, management information system reporting, financial analysis, etc.  

For example, the accounting department (part of the back-office) is responsible for recording the daily financial transactions, managing the bank accounts, and settling account payables and receivables. Their responsibilities also include preparing timely and accurate financial statements that will help in data-driven decision-making, leading to strategic and realistic decisions made basis the real-time data and figures in consideration.  

Some companies are already blessed with an efficient back-office team, and the support provided by this team is unparallel. However, few companies are yet to reap the advantages of a proficient back-office team. It calls for a group of professionals and learned individuals, which depends on various aspects like the complexity of your business, the industry in which you are operating, the total number of employees in your company, and the plans of growth and expansion for the company, etc. Once you have these details, you will be able to identify the actual scope of the back-office team and the support expected for leading the front show.  

In this ever-evolving competitive world, the concept of sustainable growth is wide spreading. Generally, sustainable growth is seen as running the business efficiently, with optimal use of existing resources, and paralleling contributing towards the betterment of the environment and society. Thus, the basis of thoughtful input and the company’s factual information and analysis becomes essential for such growth. It all comes from the accounting team. This back-office support staff team must be observant, analytical, and learned enough to provide the needed reports and data. 

To make your business reach the desired position with a sustainable growth model, you must streamline the back-office processes in the best way possible. It requires your focus on identifying the critical areas of back-office management, the flaws in the existing systems and structure, resolve the same with the best industry practices. It will help you achieve your back-office department’s optimum efficiency and productivity, making your business operations smooth and successful.  

Let us understand some of the fundamental aspects of back-office support which need to be empowered. 

How Critical is Back-Office Support for Sustainable Growth

Accounting and bookkeeping functions

While running a business, there would be financial transactions taking place every day, which would impact the company’s cash flows. To monitor the financial position of your business at any given point in time, you must have a process to record all these transactions systematically and regularly. Additionally, the accounting and bookkeeping department is responsible for activities like payroll management, keeping track of accounts payables and receivables, reconciling bank statements, timely preparation of financial statements, adhering to tax requirements and compliances, etc. 

To elaborate it a little more, let us look at the different functions being performed by the bookkeepers of any business organization- 

  • Recording the financial transactions adequately in the books of accounts 
  • Payroll management 
  • Accurately managing cash receipts  
  • Adhering to the sales and operating tax obligations 
  • Managing bank deposits 
  • Keeping track of the cash flows of the business. 

Let us also now have a look at the various types of functions performed by the accountants of the company – 

  • Effectively managing account payables and account receivables 
  • Preparing necessary reconciliation, including cash and bank, receivables and sales, payables and purchases, etc.  
  • Taking care of the month-end or year-end requirements  
  • Prepare arithmetically accurate, timely, and meaningful financial statements – Balance sheet, Profit & Loss statement, and Cash Flow statement.  

Only if the functions mentioned above are carried out accurately and efficiently at the back-end will the relevant stakeholders have the necessary details and reports to make prompt business-critical decisions based on correct facts and figures to promote the overall objective of the company towards achieving sustainable growth. 

While accounting and bookkeeping are both related to recording and analyzing basic financial information, several other positions in the back-office department oversee and monitor the accounting tasks’ overall functioning and manage the company’s financial needs. 

What is Controllership? 

In most small and mid-sized businesses, the business owner himself performs the task of the bookkeeper and a controller, as they cannot afford to hire people for two different positions, given the limited volume of transactions and limited resources. But as the business operations grow, the bookkeeping and controllership processes need to be kept mutually exclusive.  

A controller is a professional who is expected to oversee the overall bookkeeping and accounting requirements of your business, along with efforts to maintain the authenticity of the back-office functions and mitigate the finance-related fake activities that may occur in the company. Having a dedicated person to attend to the books of accounts will save you from the mismanagement of cash flows and working capital cycle while exponentially reducing the risk of internal and external fraudulent happenings.  

It is recommended to have a different position and different responsibilities for a bookkeeper/accountant and a controller for growing organizations. For ease of reference, we have enlisted hereunder the roles and responsibilities of a controller to avoid ambiguity when compared with an accountant and bookkeeper. 

  • Effectively managing and carrying out the required month-end, quarter-end, or year-end compliances and activities.  
  • Ensuring the accuracy of the financial statements – Balance sheet, Profit & Loss statement, etc.  
  • Supporting the audit team by providing real-time information and access to the required data.  
  • Managing accruals and advances.  
  • Managing and forecasting the movements of cash inflows and outflows.  

As mentioned above, achieving the goal of sustainable growth is all linked to the adequate reporting of the actual data and its analysis based on which the decisions are made. Thus, using the realistic approach, the controller’s stewardship is pertinent to step nearer to this growth plan. 

Accounting system optimization

Though the workforce operating at the back end is critical, the accounting system and management technology deployed at the back office are equally important. In addition to ensuring the separation of duties and defining the financial roles and responsibilities, optimizing the systems and applications is essential. 

Businesses that can deploy the recent technologies and advanced applications to integrate the entire business operations can only leverage the power of financial intelligence and optimal management of the existing resources. Connecting the various departments of the organization through a central system would ensure that accurate and consistent information is available to all the business stakeholders on a real-time basis, helping them make decisions for the company’s growth without impacting the working of any of the business departments or aspects.  

Only if the accounting impact is recorded precisely in the system can the consequences on the related business functions be seen adequately. For example, if a sale of (xx) quantity is correctly recorded in the system, then only its impact on inventory and the action trigger for the purchase segment would happen as to buy additional goods.  

Accordingly, deploying super-efficient and accurate systems is necessary to connect the business functions into a single chain and manage the resources optimally for sustainable

Final Words 

Now, having learned about the importance of back-office support for leading the front-line operations and achieving the business objectives of growth and success, it is an immediate actionable to empower and strengthen this back-office department of accounting and bookkeeping. If you are looking for someone to help improve your back-office division and promote your path towards sustainable growth, then CFO UAE is the right place to seek assistance. 

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