Accounting terms are relatively confusing. Even a high profiting business can be defaulted. So, accounts jobs aren't easy to handle. Especially when it is a public limited company. If you remember the Enron scandal, you can come to know what accountants can do to make it look profitable to the concerned stakeholders.
This reminds me of a joke.
Two friends, an accountant and a salesperson, were waiting for their bus. When the salesperson said “Hey, look the man on that Mercedes is my boss.” Insipidly the accountant responded “So what the man on the cart was my ex-boss.”
This is the way accounts jobs goes!
Don’t take it seriously. But at the same time don’t take it as a joke. An accountant can present a falling business touching the sky. And he can do the other way round with a boosting business. So, what type of accountant you've or want to hire?
Getting back to the main topic. I've added some symptoms, which will help a declining company to catch the cause and come back on track or take any necessary measures.
Symptoms of a declining business
Margins are slipping
Gross margin is the total sales revenue less cost. Where net profit margin is the difference between the gross profit and rest of the expenses. All the data is gathered by the accountant through different sources. A continuous decline shows the business is going down and is a threat to its operations.
When the profits are down, it will become hard for any business to generate cash. And a continuous flow can make this worse for that business. The business could have to stop their operations.
Continuous fall in sales
Even a child can tell this. But there comes the need to find what makes this happen. Is it the product or service? Or is it the sales team? Or is it the market being too saturated? Whatever the reason is, this must be found out.
Company’s financial statements will present the true value of the company. And this gives an idea as to where the business lacks and where it needs focus. Accounts jobs is to play his role honestly. Maybe he made some wrong techniques in making company’s accounts. So, does the other departments need to do to make it work for the company.
Profitable yet losing
Here comes the thing, which I talked of earlier ‘confusing terms’. It isn't necessary that a profitable company will be full in cash. Profits are just figures on documents. The real cash will be different from what the accounting statements represents. You’ll be dealing in credits, both with your purchasers and the customers. And you’ll be receiving the cash on some future dates. And even some customers will not pay at all. In accounting terms such people or companies are named as ‘bad debts.
And if we talk of the other way around, a company high in cash might be displaying shortfall in profits. Too much idle cash in hand is also not a good thing for any organization.
Although, rest of the departments will be maintaining their reports as well so that no data is misused. But it isn't easy to deal with the accountants. They can make a fool of anyone. Like I shared the joke above, this can become a real case and it does have. In some areas it is also being said to make your company’s financial position look attractive, make the accountants happy.
But there’s one professional who comes in hero, the auditors. Auditors are the agents working on behalf of the investors or the owners of the company. They can figure out where accounts are window dressed or misused.
This reminds me of a joke.
Two friends, an accountant and a salesperson, were waiting for their bus. When the salesperson said “Hey, look the man on that Mercedes is my boss.” Insipidly the accountant responded “So what the man on the cart was my ex-boss.”
This is the way accounts jobs goes!
Don’t take it seriously. But at the same time don’t take it as a joke. An accountant can present a falling business touching the sky. And he can do the other way round with a boosting business. So, what type of accountant you've or want to hire?
Getting back to the main topic. I've added some symptoms, which will help a declining company to catch the cause and come back on track or take any necessary measures.
Symptoms of a declining business
Margins are slipping
Gross margin is the total sales revenue less cost. Where net profit margin is the difference between the gross profit and rest of the expenses. All the data is gathered by the accountant through different sources. A continuous decline shows the business is going down and is a threat to its operations.
When the profits are down, it will become hard for any business to generate cash. And a continuous flow can make this worse for that business. The business could have to stop their operations.
Continuous fall in sales
Even a child can tell this. But there comes the need to find what makes this happen. Is it the product or service? Or is it the sales team? Or is it the market being too saturated? Whatever the reason is, this must be found out.
Company’s financial statements will present the true value of the company. And this gives an idea as to where the business lacks and where it needs focus. Accounts jobs is to play his role honestly. Maybe he made some wrong techniques in making company’s accounts. So, does the other departments need to do to make it work for the company.
Profitable yet losing
Here comes the thing, which I talked of earlier ‘confusing terms’. It isn't necessary that a profitable company will be full in cash. Profits are just figures on documents. The real cash will be different from what the accounting statements represents. You’ll be dealing in credits, both with your purchasers and the customers. And you’ll be receiving the cash on some future dates. And even some customers will not pay at all. In accounting terms such people or companies are named as ‘bad debts.
And if we talk of the other way around, a company high in cash might be displaying shortfall in profits. Too much idle cash in hand is also not a good thing for any organization.
Although, rest of the departments will be maintaining their reports as well so that no data is misused. But it isn't easy to deal with the accountants. They can make a fool of anyone. Like I shared the joke above, this can become a real case and it does have. In some areas it is also being said to make your company’s financial position look attractive, make the accountants happy.
But there’s one professional who comes in hero, the auditors. Auditors are the agents working on behalf of the investors or the owners of the company. They can figure out where accounts are window dressed or misused.
Chartered Accounts Jobs are one of the highest paying jobs around the globe. But a non-chartered accountant can also earn good. All they've to do is to work hard and follow the standards.