Business leaders who work with a clear picture of their organization’s finances make smarter, more informed decisions, decisions that reduce risk, increase profits, and build confidence amongst stakeholders.
Enter the accountants (and other financial wizards with deep accounting knowledge!) who document, analyze, and summarize critical data related to transactions, budgets, and financial forecasts. These individuals deliver this clarity where it’s needed most!
Admittedly, yes, we’re a little proud of the accounting profession and the power of the accounting discipline. To add some color to this topic, we reached out to seven impressive and influential leaders work in, or with, the accounting and finance world for their perspectives on one critical question:
“How would possessing deep accounting knowledge make someone a bigger asset to his or her company?”
As we expected, the expert feedback was indeed insightful.
Possessing deep accounting knowledge provides a strong foundation for someone to understand any business. That’s a pretty trite observation, but if you think about what it means, it’s easy to see why it’s repeated over and over.
The classic objective of a business is to make a profit. To determine if a business is making a profit, someone has to record the transactions that occur in the business. Collectively, those transactions tell you where money is coming from and where it is going; if more is going in than going out. The better a person understands that activity, the more valuable they are to the company.
This is relatively easy at first when a business is small and uncomplicated. As a company grows, everything becomes more complex. Sometimes it becomes so complex that a business needs to hire hundreds of people just to record all the transactions and document all the context around them so other people can understand what’s happening and are comfortable that it’s being done correctly. The deeper understanding a person has of these issues, the better he or she is equipped to help people in other aspects of the business understand their impact.
This is especially valuable to a company — having a deep understanding of accounting but also the ability to strip away the complexities and consider the profit impact of everything that a business does. That is, “Will doing X result in more money coming in, or more money coming out?” Focusing on that foundation — and being able to explain it to others in a way they can understand, will make any person a bigger asset to his or her company.
Editor, Going Concern
When people think of accounting, they tend to default to an image of someone sitting at a desk, tracing, vouching, calculating numbers and figures. But it’s much more than that. Accounting helps you understand and evaluate the financial information that goes into creating, forming, running, and maintaining a business. Many companies fail because they are undercapitalized. So whether you’re an employee, employer, or entrepreneur, having an accounting background not only helps you understand and analyze the financial data, but also make better business decisions that are vital to your business’ success.
As a CPA and entrepreneur, I can attest to this. Every business decision I make is unconsciously ingrained by my accounting and auditing background. By using this approach and applying accounting principles, I’m able to focus on the bottom line and reduce inefficiencies. This enables me to see how each part of my business makes up the greater whole, and has allowed my company to grow from one person to over 60 in the last several years.
So no matter where your career path may take you, remember that having accounting knowledge is key to building and growing not only the business you serve, but the economy, and ultimately, your career. Numbers tell a story. It’s important to know how to read and analyze that story so you’re in control of the narrative.
Founder & CEO, Roger CPA Review
Passing the CPA exam is something to be proud of. It demonstrates a general knowledge expected by the profession of its practitioners with two years’ experience.
But specialized knowledge is what distinguishes young professionals from their peers. For better or worse, there are many areas of accounting that are extremely complex, and for which a small change in a fact pattern could change the accounting treatment. My advice to an accounting student is to pick just one hot area – e.g., financial instruments, hedging, revenue recognition, leasing — and go deep.
Tom Selling, PhD, CPA
The Accounting Onion
Financial management and related decision making — both of which rely upon having basic accounting knowledge — will always be one two of the strongest drivers of small business success. Businesses that don’t have a team with these abilities will always keep that business from reaching the crucial five-year milestone. As a business owner (or even a key team member), you may have a gut feeling that the business is humming along smoothly, but there is no substitute for knowing the numbers when it comes to measuring that business’s financial health and the ability to be successful. Staying on top of financial data gives a business its best shot at becoming established. Only by knowing the key numbers can a business plan for the future!
Founder, Kildal Services
Accounting is the foundation of all business. All businesses get interpreted through the lens of accounting. There are many complexities in a business, including team cultures, marketing, selling, processes, and client contracts. But it all gets sorted out in the accounting records. Financial statements tell the historical story of how your business has been doing and how all of these complexities ultimately turn into profit or loss.
Jason Blumer, CPA
Chief Innovation Officer, Blumer and Associates, CPAs
A “comprehensive” knowledge of accounting is, of course, the cost of entry — table stakes, if you will. But more important to an accountant’s stakeholders — employers, shareholders, lenders, colleagues, the public, the clients, etc. — is a “deep” or “strategic” understanding of the business at hand.
You can get five accountants in a room and get six opinions on the proper treatment of a FASB rule. But the one in the room who can turn that knowledge into actionable business information is the only one who will provide unique value. The rest is commodity.
CEO, CPA Trendlines Research
People who possess a deep knowledge of accounting are in a better position to act as a strategic advisor to business owners and organizational leaders. No matter the endeavor, there is a money flow to fund it and that flow has to be intelligently managed. And, in most cases, there are matters of compliance to manage around that money flow, too. As a result, all enterprise leaders (large and small) need help from bright professionals who understand both the fundamental and strategic nuances of smart accounting management.
A deep knowledge of accounting alone is not enough to be a maximally marketable and difference making today. Leadership skills, technology literacy, an understanding of processes, relationship development skills, and the ability to communicate well are also required to make an impact in the field of accounting.
What’s your next career move?
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