Accounting goals to strive for in 2023

Set a strong direction for your accounting operations this year

In the last 2-3 years, many small-medium enterprises have endeavoured to become more responsive and resilient. We’ve been involved in several of such transformative projects that have been successful and thus we want to highlight what it takes for companies like yours to do the same.

These outcomes require a whole-of-company approach that definitely involves their accounting department. In practice, to be responsive and resilient means having integrated accounting processes that enable reports to give accurate and timely information to all departments, improving the company’s financial position, and futureproof mode of handling finances.?

All companies benefit from investing and customising their operations to serve unique needs. Let’s take a look at what it takes for accounting to support these outcomes in the process of:

1. Enabling Accounting Operations for Cross-Selling Marketing Strategies
2. Becoming Investable through International Compliance
3. Embracing Digitalisation with Integrated Software like Xero

1. Enabling Accounting Operations for Cross-Selling Marketing Strategies

In concept, cross-selling is a marketing strategy where a company offers related products or services to its existing customers, leveraging the established relationship to increase sales and customer loyalty. At a marketing and sales level, it may be easy to identify existing customers and make creative decisions to do cross-selling. But beyond sales insights, a company should benefit from knowing how profits are segmented across their customer segments, the profitability of product and pricing decisions, and subsequent strategies to allocate company budget and resources.?

For accountants to enable their companies to establish a well-supported marketing strategy they need to be able to access:

1. Customer Segmentation and Profitability Analysis: Accounting data helps businesses in customer segmentation by identifying their most profitable customers and understanding their buying patterns. This information is crucial when deciding which products or services to offer as part of a cross-selling strategy. By targeting customers with high profitability potential, businesses can maximise their return on investment in marketing efforts.
2. Product Performance and Pricing Decisions: Accounting information allows businesses to analyse the performance of individual products or services, including sales volumes, revenues, and profit margins. This knowledge is essential when determining which products to promote through cross-selling initiatives and how to price them effectively to encourage customers to purchase additional items.
3. Budgeting and Resource Allocation: Implementing cross-selling marketing strategies requires resources, such as marketing materials, staff training, and promotional incentives. Accounting data helps businesses determine the budget available for these initiatives and allocate resources efficiently to maximise the impact of their cross-selling efforts.
4. Measuring Success and Return on Investment (ROI): Accounting plays a crucial role in measuring the success of cross-selling marketing strategies by tracking the additional revenue and profit generated from these efforts. By analysing the financial results, businesses can evaluate the effectiveness of their cross-selling campaigns, adjust their strategies if needed, and calculate the ROI to ensure the initiatives are financially viable.
5. Cash Flow Management: Cross-selling strategies can lead to increased sales, but they may also result in higher inventory levels, accounts receivable, and other working capital requirements. Accounting helps businesses monitor and manage their cash flow, ensuring they have enough liquidity to support their cross-selling initiatives and other operational needs.

What we do is help SMEs gain access to an efficient accounting system to track sales, inventory, and customer information. This includes proper revenue and expense reports, setting up segment reporting, and ensuring that financial data is readily available for analysis. By receiving timely and accurate financial information, you can make informed decisions on potential cross-selling opportunities, ultimately boosting your bottom line.

2. Become Investable through International Compliance

The relevance and relationship between accounting and becoming investable through international compliance are significant, as they both contribute to a company's ability to attract investors and access global markets. Adhering to international accounting standards not only ensures transparency and consistency in financial reporting but also enhances the credibility of the company in the eyes of potential investors.?

1. Transparency and Comparability: International accounting standards, such as the International Financial Reporting Standards (IFRS), provide a common framework for preparing financial statements across different countries. By adhering to these standards, a company's financial information becomes more transparent and comparable, making it easier for potential investors to assess the company's financial health and performance.
2. Investor Confidence: Compliance with international accounting standards fosters trust and confidence among investors, who can rely on the accuracy and consistency of the financial information provided by the company. This increased credibility can make a business more attractive to foreign investors, broadening its investor base and potentially leading to additional funding opportunities.
3. Access to Global Markets: Companies that comply with international accounting standards are better positioned to enter global markets, as their financial statements can be easily understood and compared by international stakeholders. This facilitates cross-border transactions, mergers, and acquisitions, allowing businesses to expand their operations and tap into new revenue streams.
4. Reduced Risk of Regulatory Issues: Adhering to international accounting standards helps companies avoid potential regulatory issues, fines, or penalties arising from non-compliance. By maintaining compliance, businesses can reduce the risk of legal or financial repercussions that could damage their reputation and negatively impact their ability to attract investment.

If your SME is looking to expand your operations or attract foreign investment, adhering to international accounting standards is crucial. These standards, such as the International Financial Reporting Standards (IFRS), ensure that financial statements are prepared consistently and transparently across different countries, making it easier for investors to assess the company's financial health.

3. Empowered by a cloud-based accounting system

When are your accounting reports relevant? In today's fast-paced business environment, real-time financial data is crucial for making timely and informed decisions.?

If you could assess each transaction as they are made instantly, you can identify trends and address potential issues as they emerge, giving accountants the ability to speak to ongoing processes at important meetings. How this is done, is through cloud-based accounting software like Xero. Xero is designed for SMEs. Businesses transition to Xero by setting up their accounts, migrating existing data, and training staff on how to use the software effectively. Beyond real-time financial data, they also get automated invoicing and bank reconciliation, and seamless integration with other business applications.

1. Accessibility and Convenience: One of the primary advantages of cloud-based accounting systems is the ability to access financial data from anywhere, at any time, using any device with internet connectivity. This empowers business owners and managers to stay informed about their company's financial performance even when away from the office, ensuring they can always make well-informed decisions.
2. Collaboration and Communication: Cloud-based accounting systems facilitate collaboration and communication among team members and external stakeholders like accountants and advisors. Multiple users can access and work on the same financial data simultaneously, streamlining workflows and reducing the risk of errors resulting from outdated or conflicting information.
3. Automation and Integration: Cloud-based accounting systems offer various automation features, such as automated invoicing, bank reconciliation, and expense tracking, which reduce manual data entry and minimise the risk of errors. Furthermore, these systems can seamlessly integrate with other business applications, such as inventory management, payroll, and customer relationship management (CRM) systems, creating a unified and efficient ecosystem for managing financial data.

Conclusion

Which of these goals would help your business transform for the better? Enabling accounting operations for cross-selling marketing strategies, becoming investable through international compliance, and embracing digitalisation with integrated software like Xero—can significantly impact the success of an SME's accounting and finance department. As professional accountants, our mission is to help businesses navigate the complexities of accounting and finance, empowering them to achieve their growth objectives and thrive in a competitive market.