Maximization of its profits and allocation of its revenues is the most important objective of any business. They are after all profit making organizations, who aim at making money. But their function does not stop at just making money, systematically allocating and investing those revenues and maintenance of their proper records for future use is also a top priority. This is where accounting comes in. Accounting consists of a comprehensive analysis and recording of any financial transaction relating to the business. It also includes providing a true record of those transactions to tax collecting officials and other supervising agencies. While a small scale business organization may sufficiently perform with a single or a small team of accountants, every big scale business enterprise usually has a broad finance department which looks after all their monetary transactions.
Accounting is a need for every Business according to Scott Tominaga
Accounting is an ongoing system which indicates the financial standing of the company. For a business to run efficiently one needs accurate information about its debts and liabilities, as well as its assets and profits. Maintenance of a proper record of its data and analysis is very important. These functions are what make a competent accounting process essential, so that the management of the company can make accurate decisions. Each of their decisions should be backed up by proper information and data, which is provided by the accounts department. Scott Tominaga is an experienced accounting professional as well as the Chief Operating Officer of a reputed financial institution. Having valuable experience in both the management as well as the accounting department, he highlights the correlation between both of these departs and talks about how accounting is detrimental to the management functions. Few of the points mentioned by him are:
- Proficient planning: No management function can be successful without formulating a proper plan and no plan can be made if a person does not have all the required information to base his plans on. From making plans about procuring any asset to forming long term development plans, all of them need proper information about the financial position of the business which is supplied by the accounting department.
- Financial Motivation: Monetary motivation is the most effective motivation for most people. With the help of accounting, a company can understand if it is incurring profits or loss. This will help the management in talking steps to either look for ways to grow the profits or to ensure that there is no occurrence of any further losses.
- Aids in co-ordination – Coordination between all the departments is the key to running any organization smoothly. Accounting helps in adjusting the purchases along with sales and expenditure along with income, so that the business can run profitably.
- Preparation of Budget: Importance of a budget is known to all. From your home to your company, everything runs on a budget. No one has an unlimited supply of money, therefore budgeting helps them to keep in check and not fall into deficient. The management forms the budget of the organization with the assistance of the accounting team, who provides them with relevant information about all the funds available.
Time is of the essence in today’s times and there is a tremendous pressure on the management to take swift and effective decisions, states Scott Tominaga. But no well informed decision can be made by them without the help of the accounting team.