Accountants are probably not the first professionals you think of when trying to pin down the members of a business essential to the development and execution of strategies. Business strategies involve the long-term planning of goals and the creation of solutions to long-term problems. Good strategic planning is data driven, harmonious with a company’s vision and coherent.
Business strategy can be roughly divided into three levels:
Corporate Level Strategy
These are plans formulated by the top-level executives in a business. They are broad in nature and concern the overall growth of a company – including acquisitions and future innovations.
Business Level Strategy
All kinds of upper management within a business collaborate to form concrete strategies using the corporate vision as a base.
Functional Level Strategy
Functional level strategy is driven by the operation needs of a business as it attempts to realize corporate and business level strategies. They will be pulling all employees together to reach the higher goals. Individual policies related to finance, HR, marketing and product design are made at this level
You might be surprised to find that accountants have a large role to play in all of these strategic levels. This article is a quick guide to the ways in which accountants influence strategy.
Accountants Drive Automation And Efficiency
Senior accountants are usually the figures most familiar with the latest process automation software solutions available to a company. This is due to the accountancy profession’s longstanding relationship to emergent technology. This is nothing new. Accountancy may have been the reason for the emergence of writing, the abacus and some of the most important early computing machines. When building strategy at any level, a company will have to automate processes as much as possible in order to keep costs down and drive up productivity. A great deal of accounting can now be completed online, but figuring out which style of accounting automation will work best to achieve strategic aims takes a well-honed accounting mind.
Accountants also enable good Human Resources processes. Expenditure on pay needs to be accounted for when building a long-term strategy. Streamlining the pay and invoicing outgoings calculations is the job of a senior accountant.
Accountants Help Set Financial Goals
The development of a coherent business strategy involves the setting of realistic financial goals. Accountants in managerial roles are in a perfect position for setting the financial goals of a company, or at least advising other executives on the correct goals to aim for.
Financial goals will always have strategic consequences. These two elements of strategic business are inexorably linked. Setting realistic financial goals, therefore, is essential to achieving strategic aims, even if those aims are developed primarily through market research or company ideals.
Accountants Make Data Driven Decisions
Numerical data is the bread and butter of accountants. Numerical data also happens to be one of the most important factors considered by companies when drawing up strategic plans. Companies rely more and more heavily upon data to drive their strategic planning initiatives. Accountants – especially those with a history of corporate accounting – are the perfect candidates for identifying, codifying and analyzing datasets. In recent years, the rise of ‘big data’ has shaken up both the accounting and business strategy worlds. Big datasets are huge and diverse. They are created by interactions and actions performed online by consumers, collaborators and competitors. They can only be effectively created and analyzed with the help of powerful computer programs. Being able to operate these programs and navigate a company through this transitional stage in data analysis history is partially the role of a senior accountant working in conjunction with data scientists.
Acquisitions
Corporate level strategic planning often involves the development of a portfolio of potential acquisitions. The acquisition of other companies or intellectual properties is a risk worth taking for many organizations. Although it often involves huge expenditure, it can help modify the market – leading to the successful achievement of strategic goals. Large corporations like General Electric and Disney have used acquisition strategies to reduce the risk of being disrupted by smaller organizations. They have consolidated their market dominance by acquiring small companies that have unique market attributes.
Acquisition based strategic planning involves a great deal of accounting acumen. Executives need to be able to balance the cost of an acquisition with the potential income. Income is not just measured in money. During acquisitions, large companies will often take on the expertise and intellectual property of the companies they buy out. A good example of this can be found in recent years: the acquisition of Instagram by Facebook. Instagram was a disruptive threat to Facebook’s strategic plans. The intellectual property and expertise Instagram had access to were worth just as much as the money it raked in from advertising. Good senior accountants are able to take forecasted financial gains from expertise and intellectual property into their assessments of a potential acquisition.
Accountants Aid In Risk Management
Risk mitigation and management is an essential part of long-term strategic planning. Identifying potential hurdles and coming up with plans for both preventing and countering them is necessary if a strategy is to be considered in any way robust. Getting to the heart of the numerical data underpinning a strategic plan is the role of an accountant. Many of the greatest risks within the control of a business involve financial miscalculations and a lack of financial contingency.
Assessment And Feedback
All strategies need to involve planning for continual review and feedback. Ascertaining the level of success a strategy has found (and where it has fallen flat) is partially a task given to accountants in many businesses. Accountancy is, at the very core – a field tasked with understanding the balance of outgoings and incomings. By continually assessing this balance and going through finances with careful precision, accountants can offer accurate feedback to executives about the ongoing progress of a strategy. The better the feedback on financial matters, the more likely that future strategies will be planned correctly.
