Dedicated remote accountants are not easy to find. They play crucial roles in businesses by helping them manage their finances, make informed decisions, and maintain accurate financial records.
Accountants v. Financial Analysts: Whom to Hire?
Before we move on to discuss in detail the benefits that accountants bring to businesses, especially to small business owners, let us address a common dilemma among employers, especially new business owners.
Dedicated remote accountants v. remote financial analysts: Whom to hire for an extended accounting team? While their roles are related, and job descriptions are very similar to each other, there exist fundamental differences between them, and they have distinct focuses and responsibilities. Let us find out what they are.
List of Tasks Accountants Perform for Businesses
Dedicated remote accountants are responsible for recording, summarizing, and interpreting financial transactions and data. Their primary tasks include:
- Bookkeeping: Recording financial transactions such as sales, expenses, purchases, and payments in ledgers and financial software. This way every transaction in a business is organized in an orderly manner. As a part of the process of accounting in business and other organizations, remote bookkeeping experts handle financial transactions end-to-end- from preparing source documents to preparing financial statements.
- Financial Statements: Preparing financial statements, including the income statement (profit and loss statement), balance sheet, and cash flow statement. These statements provide a snapshot of the company’s accurate remote financial management. Essential for decision-making purposes, an analysis of financial statements of businesses gives both internal and external stakeholders an evaluation of performance and value.
- Tax Compliance: Ensuring the company complies with tax regulations by preparing and filing accurate tax returns. Tax compliance falls under tax accounting which is a sub-sector of accounting- for a specific purpose, of dealing with preparation of tax returns and tax payments. In the US, under the generally accepted accounting principles (GAAP), companies follow a common set of principles, to compile their financial statements.
- Auditing: Conducting internal or external audits to verify the accuracy, reliability and credibility of financial records and ensure compliance with accounting standards and regulations. The three main types of virtual auditing specialists– internal, external and government- are categorized on the basis of who performs the audit. Accountants of a company perform internal audits to ensure risk management by safeguarding you against fraud.
- Budgeting and Forecasting: Assisting in creating budgets and financial forecasts based on historical data and current trends to guide the company’s financial planning. While these are two distinct processes in financial planning, they are quite closely related so are often used together. Budgeting is a detailed business plan of expenses and revenues for a financial year, while forecasting is a process of making performance predictions.
- Financial Analysis: Analyzing financial data to identify trends, opportunities, and potential areas of improvement. It helps evaluate business financial transactions to assess their performance. Fundamental and technical analysis are the two main techniques of financial analysis. While one uses ratios and data to determine the value of securities, the other focuses on trends in value over time.
- Internal Controls: Establishing and maintaining internal controls to prevent fraud and errors in financial reporting. An auditing and accounting process, it assures the management reasonably of the meeting of objectives and achievement of goals by an entity- a business or company. In helping companies comply with laws and regulations, it helps them detect fraud and protects their tangible and intangible assets.
Financial Analysts: Financial analysts focus on interpreting financial data to provide insights and recommendations to support strategic decision-making. Their responsibilities include:
- Financial Modeling: Creating complex financial models to forecast future performance, evaluate investment opportunities, and assess the impact of various scenarios. One of the most highly valued skills in financial analysis, it helps companies to prepare an income statement, balance sheet, cash flow statement, and supporting schedules (known as a three-statement model) based on its historical performance data.
- Investment Analysis: Evaluating investment options, mergers, acquisitions, and other strategic decisions by analyzing financial statements, market trends, and industry data. A key contributor for a sound portfolio management, it helps assess the risks associated with a portfolio by evaluating the investment and profitability of an entity- company, organization or business. In this way it helps find suitable investors for the entity.
- Risk Assessment: Identifying and assessing financial risks that could impact on the company’s operations or profitability. To analyze areas of potential loss-making, help prevent its likelihood by identifying measures to that end, and determine the worth of specific investments, financial risk assessment is taken up by entities. It aims to remove the negative impact of business or investment risks on operations.
- Market Research: Conducting research on economic trends, industry developments, and market conditions to provide insights into potential opportunities and threats. Through it, companies can gather insights into products and services and determine their viability with a new target audience, market base, or version. These insights in turn offer opportunities for implementation of financial strategies.
- Performance Measurement: Comparing the company’s financial performance against industry benchmarks and competitors to gauge its competitiveness. It is a systematic process of measuring the financial performance of not just a company but any organization, investment or asset. Used in tracking the financial health of the entity, it gives a complete evaluation of its overall standing across various categories.
- Valuation: Determining the value of assets, companies, or projects for various purposes, such as mergers, acquisitions, and financial reporting. It analytically processes the current and projected worth of assets or entities in finance. Various approaches of valuation like relative, discounted cash flow and contingent claim are employed for various valuation requirements like strategic planning, capital financing, etc.
- Communication: Presenting financial analysis findings and recommendations to management, stakeholders, and investors in a clear and concise manner. All accounting and financial tasks, including preparation of balance sheets, cash flow statements, etc., are rendered meaningless if they fail to be communicated properly to stakeholders. Communication in finance means effectively relaying financial information.
In summary, accountants focus on maintaining accurate financial records, ensuring compliance with regulations, and preparing financial statements, while financial analysts concentrate on interpreting financial data, providing insights for decision-making, and evaluating investment opportunities. Both roles are essential for businesses to manage their finances effectively, plan, and make informed strategic choices. Hiring dedicated remote accountants and virtual finance professionals can be cost-effective, especially for small and new businesses, opening them to a wider pool of talent to pick from