Is Accounting Still Relevant in the New Normal?
The series of lockdowns, global supply chain problems, and rising costs in wages take a huge toll on the bottom line of small businesses. Unlike their larger counterparts, smaller entities have limited cash reserves — making it difficult to survive and recover after months of slowdown.
With a limited budget in place, is accounting still a relevant and worthwhile investment to pursue? The answer is always a yes.
Why is accounting still relevant?
A good accounting process helps you resolve your financial problems. With an accountant to assist you, you can evaluate your cash flow better and find effective ways to get your numbers back to normal.
To understand the importance of accounting to your business, let’s take a look at what accountants can do to keep you afloat.
Apply for government support
The Small Business Administration (SBA) offers several COVID-19 relief options for businesses affected by the pandemic. To qualify, you need to present relevant documents to demonstrate your gross revenue loss. Once you receive government support, you must maintain records to show your compliance with your eligibility requirements.
An accountant can help you select the best scheme applicable for your business and assist you through the application process. They can also guide you in managing the COVID relief funds you’ve availed based on their allowable use.
Take note that misuse of funds can get you into bigger trouble. Under the False Claims Act (FCA), anyone who tries to defraud the government will receive significant penalties.
But if you have an accountant on board, you don’t have to worry about mismanaged funds, thanks to their ability to do timely and correct bookkeeping.
Assist with financial planning
Finance and accounting professionals can help you plan for the future. Because they speak the language of business, you can rely on them in assessing your financial position and understanding the key drivers of your success. They can spot and evaluate growth opportunities, provide logical advice, develop plans, create clear budgets, and make sure capital is in place.
By entering the new normal with a solid financial plan, your business will have higher chances of recovering and becoming more resilient.
Read Next: Financial Planning Steps for Small Businesses
Make the right investments
It’s challenging to invest during a crisis, especially when you have cash flow constraints. But according to research, most successful companies invest more than their peers in new opportunities. At the same time, they put their eggs in fewer baskets — opportunities that can drive higher growth and returns.
Good thing, accountants can help you make informed investment decisions. Aside from their access to critical financial information, they can also understand complex data and economic trends. Moreover, they can assess your target capital investment projects in 2 ways:
- Its estimated value after considering the impact of demand shifts
- The amount of money you need to stay afloat today
Consulting with your accountants will let you determine the possible risks and returns of an investment.
Manage your taxes
President Joe Biden has introduced several tax changes since he assumed office earlier this year. One of his proposals, the American Jobs Plan, will increase the income tax of large corporations from 21% to 28%. If the government will stick to its timeline, this tax hike will start to take effect as early as January 2022.
But even without the proposed tax changes, the process of preparing and filing taxes is already complicated and time-consuming. And time is the resource you wouldn’t want to waste. Instead of spending your time doing repetitive tasks, it’s better to focus on developing and implementing strategic plans.
In this case, working with tax accountants is a worthwhile investment. They’re abreast with the latest regulatory changes. They also have more knowledge and experience in tax preparation. With their support, you’ll be confident that your business is not overpaying and underpaying taxes, both of which can have negative impacts on your bottom line.
Similar to getting government support, your tax accountants can also advise you of the possible tax relief you can avail of.
Overall, your tax processes will become more efficient if an accountant manages them for you.
Assess other financing options
If your business is still struggling to meet its target revenues after the reopening, your accountant can assist you in finding and assessing other financing options. Whether you’re looking into getting a long-term loan, working with an angel investor, or crowdfunding, it’s essential to know which option will benefit you the most.
For more information about the financing options available to your business, you can also check out SBA's funding programs.
Accountants vs Artificial Intelligence (AI)
COVID-19 accelerates the digital transformation initiatives of organizations. But despite the rapid automation of accounting processes, accountants remain as the go-to people in providing sound financial advice and mitigating business risks.
Automating the accounting workflow offers a faster and more streamlined way of managing your business finances. At around $30, you can already get decent accounting software that can reconcile bank transactions, track projects, and do other basic tasks for you. It’s a cost-effective option to lower your accounting costs, especially during a pandemic.
At first look, AI seems like it’s taking over accounting jobs. But this isn’t the case. Even with the aid of machine learning, you’ll still need someone who can read, interpret, and make sense of your numbers.
Related: What are the Impacts of Machine Learning in Accounting?
Look at it this way — your accounting software is the tool that makes tasks easier while your accountants are the people who make the software work. Imagine how a smartphone helps you communicate and shop even you’re not going outside your home.
Without accountants who will manage and interpret the data, your software is nothing but another $30 purchase down the drain. Any tool will not function in itself if you don’t use and program it.
It can be tempting to cut down on your accounting costs when the cash is tight. However, you must consider your accounting department as a beneficial investment instead of an expensive overhead. By changing your perspective, you can also get the results you want.
Outsource a dedicated accountant
If hiring an in-house accountant isn’t a good option for you, try outsourcing. This business activity reduces costs on recruitment, HR, training, facilities, and equipment to name a few. Moreover, you don’t have to worry about managing your accountant. In finance and accounting outsourcing companies like D&V Philippines, each accountant has a dedicated team leader who oversees staff performance and management.