Utilizing a trained accountant in your business reaps rewards.

By Snjezana S. Andrews, MBA, CPA

Improper accounting practices and non-record retention in business is like properly feeding, grooming, loving and nurturing a child but never allowing schooling of any kind. The child will look capable of taking on the world in adulthood but in reality is not because he or she is not matured and adequately equipped to process and understand all of the options that life can bring. In essence, there is nothing in the repertoire for the child to pull from.

So, it is in business. As individual companies grow from infancy to more mature stages, sound accounting practices should be the bedrock to making quality decisions. Proper accounting and record retention can adequately equip businesses. Good accounting provides the framework necessary for multiple possibilities, and unlike the neglected child, provide an awareness of all available options. It reduces the risk of theft and/or fraud and is an early indicator of business strengths and weaknesses. It also is a vehicle for growth, development and good decision-making.

Multiple possibilities
If a company would like to acquire a loan from a financial institution to expand, that company will need an accountant to prepare its financials. Perhaps an outsider is interested in investing in your business but needs to have a sense of gross profit margins; existing debt to equity ratios; business liquidity or overall net worth—an accountant is needed for that too.
Maybe you want to sell your existing company to go in another direction and will need to know what the business is worth. (After all, its worth is translated as value to you.) You will need an accountant for that as well. Targeted savings for a specific venture, future expansion, diversification—all need an accountant’s expertise. Possibilities are endless with the right accounting mechanisms in place to chart through or stay the course in business.
Every business is unique and obviously some more lucrative than others. Naturally, startups and small businesses may not necessarily be able to afford a full-time accountant, but a part-time bookkeeper with a qualified accountant checking monthly may be more feasible. Realizing the importance of this key function and investing upfront can pay huge dividends later. Making the sacrifice today prepares your business for a plethora of options tomorrow.

Reduce or prevent fraud or theft
Every transaction in business has a source, which then follows a cycle that ends as a component in the financial statements in one way or the other. Documentation such as purchase orders, requisitions, bills and receipts all form part of the cyclical trail and should be retained, as part of the record-keeping process. In retaining business records, proper checks and balances should be executed with the utmost care. One can ensure the accuracy of information by the implementation of necessary controls. This in turn decreases the likelihood of fraud and/or theft.
Making an environment hostile against fraud and/or theft is the breeding ground for curbing some of the risks associated with business. I recall my time, post tertiary studies, as an auditor with Ernst and Young in Raleigh, North Carolina and then Pricewaterhouse Coopers here in the Turks & Caicos. Detailed testing of systems; authentication of processes and documents; and gaining an overall understanding of complex industries and different company types were the norm. However perplexing the machinery or monumental the overall framework of any company that I was graced with auditing, source documentation always played a pivotal role. A word to the wise: Fraud and theft prevention is cheaper and less time -onsuming than investigation and discovery. Keep records for every transaction, use proper systems and understand how every transaction affects your business.

Early indicator of strengths and weaknesses
Business is not only about having an idea and selling that particular product or service but is also about discovering what works best for your company—the company’s niche so to speak. I have found, after being an entrepreneur for the past decade, that to be successful there is a need to constantly revamp, rethink and reinvent what was once working. As customers’ needs and expectations change, and competition gets tougher, business owners have to acquiesce, also get tougher and concede to change.
Companies have an advantage when they can target an area through financial analysis that may or may not be working. They also have a good sense of direction when financial statement indicators point out weak areas and highlight strong suits. It is not financially prudent or beneficial for instance, to continue to invest in a product that is a “slow mover” or that is not yielding the returns anticipated when first starting out.
But how will the advantage of financial literacy be beneficial if proper accounting systems and methods are not implemented and practiced? Playing the guessing game with personal or partnership investment is not wise and is not the formula for success. Instead of guessing, hire a professional to take care of the fundamentals so that your business can thrive.

Growth, development and decision making
As the old adage says, “Numbers don’t lie.” As a Certified Public Accountant (CPA) and an entrepreneur, I can confirm that they don’t. 1+1 will always equal 2, nothing more or less. Since this saying holds true, why play “Russian roulette” with company direction, growth and development when all of the answers lie in your receipt books, cheque books and bank statements? Capitalize on all that knowledge by utilizing it in a meaningful way. Hired as an intern with IBM during my college career, and taking on the role of Fixed Asset Analyst, helped me to segment and appreciate, more so, every component in the financial statements. Even the smallest element is intrinsically connected to something much larger for the company as a whole. Detailed, accurate information provides the foundation for great management and owner decisions.
There is a conception that qualified accountants are much too expensive. Albeit the case in some instances, there are many part-time scenarios that may work well for your company and be in keeping with its coffers. It is much more expensive however, when windows of opportunities are missed and increased revenues forgone simply because of an unawareness or an inability to interpret the numbers that provide the correct data.
I personally understand the financial concerns of small business owners, as I, too, had the same pressing concerns whilst growing two small businesses from the ground up (Caicos Wheels and Island Tours and Excursions). Thankfully, however, I was able to pull knowledge from my Master’s in Business Management and my being a Certified Public Accountant (CPA). My aim is to also help other companies and share what I have learned over the years.

The A Team, a CPA Firm, launched in December 2017 and is focused on arming small and medium sized businesses with what is needed to flourish. The firm offers an array of services such as audits, reviews, compilations, financial analysis, payroll and tailored accounting based on company needs. Allow The A Team to assist your Business in financial prudency.