Accountants are traditionally thought of in one of two roles within a business or company. One is the in-house preparation of accounts, including bookkeeping and other financial reporting, and the other role is that of an external auditor checking the company's accounts to make sure they are true and accurate.
Over time, accountants have become much more involved in the financial running of most businesses, and nowadays play a crucial role in all of the major decisions that a company or business will make.
Depending upon their size, the company will either employ in-house accountants or use the consulting arm of one of the major accountancy firms to help them plan and make financial decisions that affect their business. This usually involves being involved in things like preparing financial statements for different divisions within a company that allow them to maximize the resources of the company as a whole.
These financial statements are normally done on a rolling basis, often monthly, and can involve cash flow projections, staffing costs, production problems and a wide range of other issues that can affect the operation of the business. The work of the accountant will focus both on strategic issues and also on specific issues within the business such as cost-benefit analysis.
Cost/ Benefit analysis
The phrase cost-benefit analysis has become a bit of a slogan for people deciding whether to make a particular decision or not. In business management terms it has a more specific meaning, normally related to the cash position of a company. As a company grows and hopefully makes profits, it can generate quite large amounts of cash that strangely can present a real problem to the business. There is often quite a lot of pressure on the business as to what to do with the money it generates to get the best possible return on it.
The normal options include returning the money to shareholders, reinvesting in the business, acquiring other businesses or investing the cash in some other way to benefit the company. All these options need to be carefully considered in the context of a cost-benefit analysis, and the business management accountant will be at the forefront of preparing the pros and cons of each decision and helping the management of the company decide what is in their best interests.
Aside from the cost-benefit analysis role, a business management accountant will work full-time on helping the company prepare financial reports that underpin all the business decisions that the company will take, both in the current financial year and possibly decades in the future. This can include deciding on budgets within the company for specific divisions, deciding on the cost and implementation of IT systems and different types of software, helping to look at pay rates and bonuses, deciding on several permanent staff as opposed to temporary and agency staff, etc.
The accountant will also be involved in long-term planning, which is one of their key functions. Most businesses will be looking to the future in terms of planning their growth, and what it means in terms of the scale of the business. This will involve financial decisions about office space, plant production, staffing levels, as well as a range of tax and legislative implications.
Whilst a business management accountant is likely to be involved in all of the above roles, the scale and influence of their work will depend to a large extent on the size and structure of the company they work for or are employed by. For more information on business management, contact a professional near you.
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