The owner of Enterprise may not know it all. He should be willing to engage Accounting Staff with requisite skills and experience to help build the systems, implement automation if required, build dash board for revenue tracking
By Charles Nwokolo
Ike.IntroductionAccounting provides information about business activities. It is a process for generating and providing various types of financial information. It involves gathering, organizing, presenting and communicating data about economic activities of a business organization for informed decision making. The recording, classifying and summarizing of data relating to these economic activities is referred to as bookkeeping. Bookkeeping leads to maintaining basic records such as daily summary of Income received, Expense summary, Sales report, Buying & Inventory systems, Account Receivables and Payables, and Payroll.
The needs for Accounting Systems
The major activities of a business relate to investment, financing and operating activities which will bring benefits or Cash flows in the future. These economic activities involve the use of resources such as Plant & Machinery, Finance provided by the Owners as Capital or Financial Institutions as Loans, labour by Employees and Goods and Materials by Suppliers to produces goods and services. These resources have their various costs as input to the system. The money value of these resources used can be analyzed, and compared from time to time, say, monthly or yearly with the value of goods and services generated as output to calculate Profit or Loss of the business. For an organization to function effectively, it needs up to date information about the cost of its activities and without such information profit cannot be measured.
Accurate and Complete Records
Whatever the size of any Business Concern, good records are vital. Without them an enterprise will not be able to assess its past performance, present or know where it is heading. Keeping records that are accurate, up to date, and easy to use is one of the most important functions SMEs should give adequate attention. The management cannot effectively manage a business without adequate records. They need accurate information relating Customers and how much they owe the business, Suppliers and how much the business owes them, how much are paid to employees, and how much capital is employed in the business and how profitable the business. The overall information also will help the organization to monitor trend, current activities as well as provide guideline for future planning and policy. Information needs of StakeholdersAccounting as information system serves information needs of various stakeholders such as Owners of business, Employees, Suppliers of credit, Customers etc. For Owners who provided the bulk of capital to the business, they are interested in Earnings which result from the use of the resources being provided and their rewards in form of dividend or cash withdrawals. Employees who provide labour are interested in adequate rewards in terms of remunerations and stable employment. For the Creditors who supply goods and services, credit to the organization, they are interested in receiving payments and available information to evaluate the solvency and liquidity status of the business to meet obligations etc. Management has a responsibility to invest and manage the resources of the business to generate returns in inform of Cash Flows and ensure the profitability of the business to sustain future growth.
The role of Accountant
The owner of Enterprise may not know it all. He should be willing to engage Accounting Staff with requisite skills and experience to help build the systems, implement automation if required, build dash board for revenue tracking. His responsibilities will include helping the organization to establish budget, cash flow forecast, pricing structure that will maximize profit, and prepare the company’s books of Account, management reports of financial position, performance and Cash flows of the business. He will also ensures company’s financial reports comply with regulatory and accounting standards and there is strict adherence to company policy, procedures and guidelines.
Value Adding to SMEs
The SMEs operators will benefit much when they pay greater attention to accounting and bookkeeping functions as insights gained from accounting information will assist them in planning and controlling their business, providing basis to proffering solutions to challenges affecting quality decision making process as well as generating information about the financial position, performance and cash flows of the business. The vast amount of information generated from accounting system will help the business owners to understand the business better and plan, develop and implement growth opportunities, marketing and customer services.
•Consultant.cinwokolo@gmail.com+234 8030599774
