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Finance Accounting and Added Value

The traditional role of accounting isn’t that exciting. And to be honest, neither is that of banker. In one case you’re carefully doling out money and in the other, you’re diligently watching where the cash flows go. With this traditional outlook, it’s hard to think of financing as adding value.

But these days, it seems like the buzz term of “financial innovation” is getting more and more exposure in the mainstream news. So what’s that all about? Of course the products of financial engineering might not be what not appear that flashy. But flexibility in finance can be a sustainable competitive advantage. Seriously!

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Now while capital eventually becomes a commodity, the ways in which deals are structured is where the value really comes in. That’s because the right accountant, controller or chief financial officer will be able to provide context on the opportunity costs of different ways to fund operations.

And when you’re running a business at scale, padding your margins with a couple of percentage points can go a long way to making shareholder value. After all, over the long run, those numbers could really add up. But if you aren’t financially aware then you might not even know these opportunities exist. On the other hand…

If you’ve been in business for some time, this probably doesn’t come as a surprise. But a large proportion of business owners and entrepreneurs are either just starting out, or come from a sales background. Without a working knowledge of financial terminology, common deal structures and access to a good financial advisor (be it in-house or independent) can leave you at a disadvantage.

For more research on what makes a good accountant, I’d encourage you to read this article about why accountants add strategic value. The options that a good accountant can offer might surprise you. And if you don’t have accounting, budgeting or managerial financing skills yourself, then it might even be in you best interest to hire someone for help.

So whether you’re preparing for growth or looking to finance your way out of trouble, knowing the opportunity cost of different deal structures is a critical building block in your business success. It’s an important tool in your arsenal and one that only becomes more and more powerful as you grow.

And keep in mind, financial flexibility doesn’t have to just come work for you. If you can add value to your customers through flexible financing solutions then you’ll be even more better off. You empower customers to buy and be more flexible with their cashflow. That’s something every business person will appreciate. So now let me ask you a question…

Are you using finance and accounting to add value in your business operations?