Industries expects accountants to have prodigious organization skills and a high degree of accuracy, but there is more to being an exceptional accounting expert than these above mentioned two qualities.
Accountants are often thought of as extremely precise on details and vast amount of practical knowledge, and rightly so. If you make even a minor mistake in this competitive working environment, it can have a huge impact.
Let’s discuss top 9 Qualities of an Accountant-:
1. Well-informedand Updated
Solid grasp of the basics is just not at all enough. Accountants must regularly stay well-informed with the industry’s general accepted accounting principles or GAAP, as well as any changes in tax laws. Attending conferences and seminars will help keep them up to speed on the latest in accounting drifts. Industrial advancements are also evolving at lightning speed, and turning away from these changes will be a huge damage to the businesses.
2. Well-Planned and Prepared
Staying on top of all the figures and data that accountants deals with on regular basis requires good Planning and preparation skills. It saves time because they have a system that allows them to find the information they need swiftly. Having a planned manageable structure allows them todo their day to day worksand their number-crunching duties without unneeded interference.
3. Being Precise and Detailed oriented
These personality traits are crucial in the taskthe accountants do. To be very precise, the numbers they are working with need to be accurate and correct. Doing due diligence should be second nature to them, and not something that they need to be repeated with regularly.
4. Being Responsible
No surprise here: accountants must be responsible. No pointing of figure is allowed. Let’s face it: even the most detail oriented accountants who always do their due diligence are also human, and are, therefore, also fallible. There’s no shame in making an honest mistake that’s attributable to human error, and are not deliberate mistakes that happens too often.
5. Being Team player
The conventional image of a lone accountant doing their number crunching in their own workspaces is an inaccurate picture of what accountants do. They typically work in teams, clients, and other decision makers on a regular basis. They are therefore required to be substantial with what they know; sensitive to other’s needs, and be supportive of their team’s goals. They can work with different types of personalities.
6. Being Creative
The ideal accountants use their creative sides, too. They use fresh ideas and creative strategies to solve client dilemmas. They don’t always show up in textbook cases.
7. Being Reliable and Professional
Trust is something that is not easy to build, and it’s a trait that must be taken seriously to earn good feedback from clients.The information accountants work with are confidential in nature. Therefore, professionalism is an important trait that they must always abide. Not only is this but having a reputation for trustworthiness will win them more clients.
8. Persists Good Communication skills
Having the ability to read, understand and interpret complicated accounting concepts into ideas that can easily be understood by clients is an invaluable trait that an ideal accountant should possess. An accountant that can interact easily and get their ideas across clearly to anyone is a major asset that clients and employers always look for.
9. Moral Values
A strong sense of honestyand Moral Valuesare traits that inspire confidence in an accountant’s work and professional practice. This is a trait that should extend into their personal lives as well, because an accountant who can be morally upright and live as an upstanding citizen is someone who will most likely obey the rules of law.
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Accounts Receivables constitutes a significant source of funds which is the key to any successful business. Any business, irrespective of its mode of operation and size, depends mostly on accounts receivablesto ensure a smooth cash flow system.
There are multiple ways to manage accounts receivable. None of them can ensure complete success but can curb the uncertainty of recovery. In the scenario of B2B sales, offering a discount for quick payment, has often proved to be beneficial. The discount usually varies between 1% to 2% of the invoice amount when paid within a stipulated time frame, as per the terms & conditions agreed upon by seller and buyer. This benefits both the seller and customer. It’s a win-win situation for both. You get a hold of your cash rapidly while the buyer enjoys a little savings
The 2nd best option is to levy financial charges as a penalty on overdue accounts. This usually varies between 1.5% to 2% per month. This acts as a catalyst and forces the customer to make timely payments, simultaneously compensating the business owner for the length of time the cash is unavailable.
It’s universal that, longer the receivable are outstanding, there’s a reduced possibility that the payment will be received. Therefore, it’s of vital significance to notify customers who are overdue, send past due notices and employ a policy for when to turn a customer over to collections or file suit in court. Collections have better luck if the bill is 90 days old or younger. Diligence and quick action at your end, is what distinguishes between getting paid or not.
The fault lies in resuming work for a customer who is yet to pay. Ask yourself this,if they have denied you timely payment once, why would they be prompt now? We all know the squeaky wheel gets the grease, you aren’t squeaking if you continue to do work for a deadbeat customer. For a Business to run efficiently, the account receivable process has to be continuously greased to ensure effortless functioning. Depending on the amount of cash available one has to buy more inventory, pay salaries, and cover the overheads, etc. accordingly. If a chunk of the business cash is clogged in accounts receivable, the business owner is headed for big trouble.
To ease up the trauma of accounts receivable management, most businesses acquire a line of credit from banks. This plays the role of a credit card for the business and preserves the cash flow system in order to survive until the accounts receivable are recovered. The charges for the same varies from bank to bank. The drawback being this is equivalent toa loan, which needs to be paid back or the bank will foreclose on the assets it demanded as collateral.
The last resort is to factor (sell) the accounts receivable. In this scenario the business owner trades a portion of the outstanding receivables to a factoring company. The factor remits a check to the business owner. The accounts receivable payments then go to the factor. The fee for this service varies depending on the quality of the customers owing the accounts receivable. A business that doesn’t qualifies for a line of credit, this may be the only way to keep the cash flow at a stable rate.
For some businesses, factoring seems to be a sensible option to go for despite of being qualified for a line of credit. The best part about factoring is, it’s not a loan. Factoring fees have come down, making it a very reasonable choice for businesses. The factoring companies sometimes help manage the accounts receivable for you, thus saving your time and wages.
Financial Reporting plays important and crucial part in every business. A sound Financial Reporting is crucial for both the management and investor; it helps them to take their decision for smooth business flow and development of future growth.
Especially when we are a small business, it becomes a challenge for us to manage everything at our own like handling business operations, Sales, Business development, Accounts,Human Resource (HR), Payroll activities andCompliancesetc. As the specialized area of an entrepreneur is client acquisition and business development, so most of the times accounting and compliances takes a back seat and ultimatelycause wrong Financial Reporting and Analysis. Ultimately Business suffer.
Few of the Financial Reporting mistakes which a small business should avoid to improvetheir business decision and cater towards growth:
1. Absence of Daily funds Report:
Daily fund report plays very important part of every business and must be a mandatory part of your financial reporting. Through this report only, an entrepreneur can manage his working capital requirement and also can plan for emergency funds requirement. Most of small business fails due to the lack of planned working capital.
2. No Budgeting and Forecasting
Planning is very essential for every business. A sales forecast and expense budget is key step to move the business in a right way. Most of the time, this does not fall in the top agenda in Entrepreneur’s to- do list due to time and budget constraints. This is where most of the businesses fail.
Forecasting and Budgeting will provide you a benchmark for your business analysis of variance with actual figures in your Financial Reporting will give you a road map of current business activity.
3. Missing Debtors Ageing
Debtors ageing play a vital role in your financial reporting. Through Debtor ageing an Entrepreneurcan know how long it takes to get funds realized from customer and accordingly he can plan his funds position. Getting paid is crucial to your business, and overdue payments are detrimental to the financial position of the business. Follow up with Debtors is more convenient and in timely manner with Debtors Ageing.
4. Lack of Creditors analysis
Through this report you will get to know how much you owe your supplier at any point of time.
This analysis indicates which supplier must be paid first to avoid credit or supply issue or interest factor if any. This will impact credibility of a business in long run.
5. Lack of Ratio Analysis
Through ratios one can easily communicate the preferred information to the concerned persons in a more learned manner. Various kinds of ratios help in highlighting the areas which required management’s attention and thereafter corrective action based thereon, ultimately facilitating decision making in a more facilitative manner. Few of the Important Ratios are as below:
a) Gross Profit Ration
b) EBITDA %
c) Net Profit Ratio
d) Receivables and Payable Aging Ratio
e) Net Working Capital Ratio
6. Non Preview of Short/long term borrowings
A financial reporting should clearly represent Loans and financial obligations due within the company for a specific period. The borrowings comes with a specified interest factor; it is crucial that borrowings are re-paid in that period only, else additional interest factor comes into effect; thereby causing financial losses.
7. Non-control over statutory and compliance tracker
Adhering with meeting timely Statutory Compliances is crucial factor for a small business to grow in long run. Noncompliance will cause lot of mental and financial loss to the business in the form of Interest and Penalty etc.
Ignorance over Analysis of expenditures
A financial reporting should include a percentage (%) comparison of expenses like Salary cost, administrative cost/ other overheads with total cost as well Sales in a company in a period. This will help in controlling over the actual expenditures and cutting on the cost centers.
8. Absence of Product Costing:
Most of the time, entrepreneurs ignore the importance of having in depth and detailed working and analyses of costing of their Product. A deep analysis of the same helps in improvising the margin involve in a particular product.
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