Optimize the management of your business through accounting

The accounting is generally perceived by companies as an administrative burden while it can represent a real opportunity in terms of management optimization. In fact, it is the foundation. Compta-Facile chose to highlight this rather unknown aspect of accounting by answering questions: why and how to use accounting to optimize the management of its business ?

 

Why use accounting to optimize the management of your business?

The Accounting  is the information system that centralizes information about the company. It collects and produces data that concern not only the company itself (financial indicators such as turnover, cash, etc.) but also its partners (suppliers, customers, tax administration, social administration).

Moreover, for most companies, accounting is an obligation . It would therefore be unfortunate to deprive itself of its beneficial management effects and to use it only in order to meet its accounting obligations .

Accounting is also governed by common principles, ie rules applicable to all companies (called accounting principles ), with the objective of producing information:

  • Which is as close as possible to the reality (one speaks in particular of faithful image),
  • Which is homogeneous and constant over the years,
  • This allows comparisons to be made in time and space.

The accounting is the best optimization of the management of a business medium .

How to use accounting to optimize the management of your company?

Optimize the management of your company through accounting: prerequisitesGoing on good basesIn order for accounting to properly fulfill its role as a management optimizer, it must be based on a reliable and quality raw material . This is why it is essential to set up the accounting software correctly upstream and in particular to ensure that there are no duplicates (supplier cards created twice, for example).

Keeping your bookkeeping up to date

Delivering timely and useful information requires you to enter your books on a regular basis (or to have your accounts entered if your account is entrusted to a public accountant ). The frequency can be daily, weekly or monthly. It is advisable to carry out, at the end of each wave of accounting records, a simplified auditing process.

Save time on a daily basis

  • Optimize the management of your business through accounting: tools
  • Monitor changes in working capital (WCR)

By following closely its accounts, the manager or the manager can improve some of his financial ratios and in particular his working capital requirement ( WCR ) . The challenge here is to control it because this indicator has a direct impact on the cash flow of the company (at the most it decreases, at most the cash increases). It represents the financial need on which it depends:

  • Given the unsold inventory to be financed and the claims it must recover,
  • After deduction of the debts which it has not yet settled.

Set up relevant dashboards

  • Compare the variations of the indicators over time,
  • Set targets to improve key indicators,
  • Identify gaps between projections and accomplishments,
  • Analyze the reasons for the failure to achieve the set objectives.

Make forecasts as realistic as possible

Accounting answers the question “Where am I? “But it is also important to answer the question” Where am I going? ” “. And concretely, it is the financial forecast that makes it possible to answer them. Composed of a set of tables ( of forecast income account , forecast balance sheet , cash budget, etc.), it is more or less elaborate and complex depending on the size of companies. In the smallest of them, it may include only a balance sheet and an income statement (see also a profit and loss account only).

Accounting plays a fundamental role here, because it is difficult to see where one goes without knowing where one comes from. It will therefore provide the necessary information for the preparation of the business plan, in particular the amount of receivables and payables to be allocated in cash, the amount of projected amortization  smoothed over several years …

Conclusion : accounting is a quality support to optimize the management of its company. In particular, it enables it to control its working capital requirements, set up monitoring and management tools for the company and anticipate the future with as much objectivity as possible