What is the role of accounting in business planning and decision-making?
Accounting services can be considered as one of the most important features of any business. Accounting services are the basic services that are required in the day-to-day running of a business. It is also used for the long-term planning and allocation of resources for various functions in a business. Even a small error in accounting can result in a huge flaw for the company.
The role of accounting services is not confined to ascertaining the financial state of a business but it also assists in making the plans of the business and helps the management in making decisions that are favorable and more profitable to the company.
What are the Major Benefits of Accounting?
Accounting plays a pivotal role in the decision-making process of the company. The financial book prepared by an accountant of a company contains all the information about the company which helps the management and investors to understand the current financial position and soundness of the company.
In order to cope with the changing business circumstances, the business and its management need to constantly understand the present picture and problems faced by the business. The accounting function is required by the management to know every minute detail of the company. The accounting function can be used to collect all the financial data of the company so that the management can decide the course of action according to it.
Accounting services are a very crucial function for business planning. As we know that the future of the business is unpredictable, the management must evaluate every single and minute detail of the business to make a correct decision. These decisions will not only be made taking into consideration the present conditions but also the predicted future conditions, accounting supports the management in making decisions that will be beneficial for the firm.
Read more: What are the different types of accounting practices in the UAE?
What are the Advantages of Accounting to a business during the planning process?
Accounting helps in the growth and development of a business. The advantages of accounting function for a business may include the following:
Provides Elaborated Statistical Information about the Company.
The accounting function provides valuable financial information to the company which allows the management to make decisions regarding the future activities of the company. It also helps in providing transparent pictures to the investors which builds the confidence of investors and will help the company to be more profitable.
Helps in Proper Utilization and Allocation of Resources.
The accounting function helps the management to identify which resources are used properly and judiciously and which are not. With the help of the accounting function, the management can formulate decisions regarding optimum utilization of resources. By doing so, wastage can be minimized and the company can be more profitable as a result of the reduction of cost.
It ensures if the Compliance Requirements are followed or not.
Nowadays, compliance with the laws and regulations of the land lies at the top of the priority lists of the companies. If such compliance's are not followed, the company may have to face many problems such as huge penalties. Hence, the accounting function ensures whether the company follows those compliance requirements or not and protects the firms from huge penalties.
It assists in the Auditing Process.
Accounting is considered as a basic function conducted by each company. It helps gather various pieces of financial information which can be used during performing other functions like Auditing, filing for Taxes, etc. if the accounting function isn't performed properly then such other functions cannot be performed at all.
It provides assistance in the Preparation of Budget and Future Plans for the Company.
Budget preparation is a major step for a company as it focuses on getting the company more prepared for the future. This will also ensure the prudent use of the company's resources allowing the company to be prepared for any future uncertainties.
Because of all these advantages, accounting functions play an important role in the planning and decision-making of a company. This function helps to gather and collate all the necessary financial data of a company so that it can formulate accurate plans for its future. It also maintains a transparent relationship with the investors which gives them firm grounds to trust and build their confidence.
Read more: Why is Accounting called the Backbone of Business?
What can CDA do?
If you require accounting or auditing services in UAE, then feel free to approach CDA which is one of the well-known accounting and auditing firms in UAE. CDA is known for its professionalized and personalized services with maximum efficiency, it always ensures customer satisfaction and maintains a healthy relationship with the clientele. To know more contact us.