Financial Operations - What is the Role of the Accounting Department?

The accounting and financial department handles the cash flows of a business. They are responsible for collecting payments from customers, analyzing customer records for errors, and issuing checks for payments made by their customers. It is their job to reconcile all of these transactions and make sure that all payments recorded are correct.

In order for a business to properly manage its financial department, it must keep accurate records. These records include the sales statement, journal, and the balance sheet. All transactions involving cash flows, including invoices, payments, equipment leases, mortgages, and accounts receivable must be recorded in the bookkeeping or payroll records. Accounts receivable and accounts payable are the two categories that must be separately recorded because they involve different parties. The accounts payable section will show the gross amount of money that the customer has given the company while the account receivable section will show an accurate amount of money the company has collected for the sale of goods.

Because some small businesses are often considered too risky to hire full-time accountants, many choose to outsource their accounting work to other companies. While this may be cheaper than hiring a full-time accountant, the results of the outsourcing cannot be guaranteed. Not all accountants are created equal. Many talented but unprofessional accountants can work for small businesses, while inexperienced, outsource accountants may not be as helpful. If you do decide to outsource your accounting work, do your research and make sure that you are getting a good deal.

Another division that should be separated is the  finance  department. Many small businesses have separate financial officers who handle the day-to-day operations of the  finance  department. This is fine if the owner wants to leave the company and no longer has a hand in the workings of the  finance    department. However, if the owner wishes to stay and retains the services of his finance department, then separating the two departments is a good idea. It allows each department to concentrate on its own specialty.

The accounting manager is the head of the accounting department. He or she is responsible for approving expenditures and keeping all records on the company's accounts. The manager is the main contact for anyone who requests a quote, requests for documents, or makes changes to the company's accounting policies. Because the accountant is the main contact for the company's accounts, the accountants usually receive a raise or promotion when the company increases their profits.

Finally, there are two additional divisions of the accounting sub-department that are often overlooked. One is the financial strategy and planning department. The financial strategy and planning department to develop the business's financial plan, which is used to attract investors, obtain bank financing, and attract new customers. Because the manager of the financial strategy and planning department is usually in charge of the company's finances, he or she will often lead when other employees need to speak with bankers or investors. In addition, the manager is the primary contact when it comes time to implement the business's financial plan.

The third division of the accounting department is the chief financial officer (or CFO). The CFO is in charge of the business's cash flow. In many small businesses, the CFO is also in charge of the budgeting and money management. Because the CFO represents the face of the company, when problems with finances occur, the CFO plays an important role in assuring investors and banks that the company's finances are sound. This position requires special training, since the CFO must be proficient at managing financial transactions, understanding accounting principles, and being able to communicate effectively with other employees.

Every employee in the accounting department has various duties. For example, a cfo may handle the company's check processing, cash management, and accounts receivable processing. Other duties included in the financial responsibilities of a cfo include: loan administration, investment and lending, tax obligations, preparing financial statements, providing client support, preparing financial reports for government authorities, preparing financial proposals for investors, implementing and administering employee benefit plans, developing and maintaining employee accounting policies, and maintaining payroll records.