In contrast to bookkeeping techniques which only include recording, accounting techniques are more centered on the calculation and analysis of financial flows related to business conditions. In short, accounting benefits are vital for business continuity. At https://lokalerevisorer.dk/, you can get the best accounting services for your business or company.
Then, how can accounting help financial analysis and are there other functions of accounting for business continuity? After reading the five points below, you will find out the benefits of accounting for business development.
Provide financial information for basic managerial decisions
Occupying a managerial position requires you to be fast and responsive in making the right decisions to achieve company goals. In the decision-making process, you have to consider various things, one of which is the financial situation of the company.
For example, when dealing with higher product demand, companies can see accounting calculations as a basis for decision making. If company revenues are high and cash flow is running smoothly, purchasing assets to increase production makes sense. In other cases, cash flow runs slowly and it turns out that the client is always late in payment. This can be a guide for managerial to improve relations with clients, instead of spending capital on production assets.
As information/reports to external parties
External parties such as investors and shareholders need information such as financial statements to assess the performance of the company and management.
One of the benefits of accounting is allowing external parties to track the development and activities of the company. If the company’s finances are healthy and stable, it is likely that investors and shareholders will return to invest capital for the development of the company.
Conversely, if it turns out that the company’s financial situation is not good, investors can help by giving
Financial control and control devices
In business development, accounting also acts as a financial controller and controller. The benefits of accounting in providing fund management information such as profits and losses suffered by the company indirectly function as a financial control tool for the company.
For example, by knowing whether profits have increased or decreased and the amount of current balance you have, you can control your expenses and develop plans to increase revenue for the achievement of your company’s goals.
Company evaluation tool
Evaluation is quite important because by carrying out the process of analysis and evaluation of the company’s performance in the previous period, you can find things that can be improved and useful feedback for developing a company’s strategy going forward.
Accounting provides you with monthly financial statements that can be evaluated. From the financial statements, you can see what marketing strategies produce the most. What expenses add value to the company and which expenses are less valuable.
Basic allocation of resources
Resources such as capital if properly invested can generate profits for business development. With so many choices in allocating resources, you can use financial information as a basis for decision making.
For example, you have two choices in allocating funds between buying high-tech machinery to make the production process more effective and efficient or increasing the commission on the sales department so that employees become more motivated in achieving product sales targets.
First, you can see which options are within your capital coverage through the company’s accounting report. Second, you can see the status of your production and sales so far. If you have never experienced a shortage of product stocks, it would be wise to increase sales rather than increase production. Third, you can see expenses in your accounting statements for making decisions. It might be that you find that machines for production currently consume a lot of operational costs, while newer machines do not cost much.
To allocate funds to the right choice, base your decision on the financial statements. In addition, decisions based on financial statements are also more based and can be justified.