When it comes to accounting, the process is often stereotyped as a set of tasks involving numbers that must happen on a recurring basis to “keep the books straight”. But that’s just one perspective (which honestly is true of most functions in any business if we step back and look at each functional department). Those ‘number’ tasks definitely need to occur, if the business is going to remain compliant with regulations or even be able to provide any sort of effective reporting and performance measurement for owners and decision makers. However, there is a whole other perspective that paints a picture of accounting as an invaluable function of any business entity (or even household).
Accounting is the “language of business”- and all compliance and rules aside, without a solid financial foundation and understanding, a business is left with little more than luck to succeed sustainably. The decisions, planning, strategies, development, and operations are all supported by a strong understanding of where the business has been and a calculated forecast of where it is going. Godaddy, which works with countless small businesses thru provision of domain and website services, did a recent survey that revealed some interesting trends among small businesses’ emphasis on accounting:
- Almost half (46 percent) of small business owners reported they do not work with an accountant.
- Of those small business owners who do work with an accountant, 47 percent see their accountant once a year at tax time or only when they have a question or need help.
- In the last 12 months, nearly a quarter of small business owners said they had lost track of whether a customer has paid them or not, or could see it happening in the future.
- 32 percent of small business owners do not set aside money throughout the year to pay income taxes.
So it isn’t just about having your ducks in a row or sending a form in by due date. That is just the ‘checklist’ part. The real value is understanding the ‘what, why, and how’; not once a year, and not by random guesswork. The tools that help with this part of the process are growing feverishly and make the ‘checklist’ part of the equation manageable (and at times, yes, even enjoyable). These tools live in the cloud and on your mobile devices, making collaboration and real-time info readily available. Likewise, there are also troops of professionals out there who thrive on helping SME owners manage the functions of their business that they are less likely to do on their own…whether due to expertise limitations, lack of interest, or simply the fact that their time is more valuable doing what the business was formed to do in the first place. Together, these available resources make ignoring the financial functions an even costlier decision in the long run.