23 Functions and Duties of Accounting and Finance Department of SMEs

Accounting and finance department of small businesses have evolved over time to become the hub of small businesses. A quick look at the functions and duties of accounting and finance department of SMEs will give you insight of what has become of the accounting profession. A functional accounting and finance department of a small business adds value to the business when given the right tools to work with.

You cannot provide your accounting and finance department hoes and expect them to cultivate as though they have tractors.

In order not to make this article too long, I will be very brief in describing the functions and duties of accounting and finance department of SMEs

Functions of Modern Accounting and Finance Department

1. Treasury management: accounting and finance department sets up treasury management policy to be adopted by all who come in contact with cash or cash equivalent. Included in the treasury management are things like the level of risk that can be assumed by the firm at any point in time. The treasury functions are usually managed by the assistant finance manager while the finance manager or the chief financial officer handles the financial accounting aspects.

The treasury functions of a company are all the activities performed by a responsible officer with the aim of implementing treasury policies.

2. Cost control: to an extent, the whole essence of accountancy is to control cost and report on activities. There would not be an accounting department if it does not actively get involved in cost saving activities. It is typical of accounting department to be in log ahead with other department primarily because costs are being cut.

3. Billing and Credit control: accounting and finance department is saddled with the responsibility of ensuring that customers pay their correct bill on time.

4. Investment appraisal: through the application of capital budgeting technique and investment appraisal technique, accounting and finance department help businesses pass every major project through furnace to ensure that it will be worthwhile.

5. Ensuring compliance with relevant laws: the business world that we now live in constantly changes in the bid for us to make things better. The fact that most small businesses don’t have dedicated lawyers or attorneys in their payroll makes it imperative that the accounting department will keep tab with relevant business related laws.

6. Handling tax issues: the accounting and finance department of small businesses handles its tax matters. This includes remitting PAYE to the relevant authority.

7. Preparation of financial statements: even though it is legally the responsibility of directors of a company to prepare the financial statements, the finance and accounting department is always called upon to prepare the financial statements.

8. Safeguarding assets through internal control: accountants and finance professionals play vital role in helping to protect the assets of a company. This they do by designing and implementing viable internal controls and management controls.

9. Inventory management and control: inventory control and management is within the purview of the accounting and finance department. No other department is better equipped to manage and control the inventory of a small business.

10. Business advisory function: the accounting and finance department provides business advisory services to the small and medium sized businesses.

11. Information system assurance: accounting as a profession has over the years grown to become an information processing profession. This information has to be given some kind of credibility by the accountant acting as auditors- internal auditors for small businesses.

12. Payroll system: payroll system management is very important in the management of small businesses. Get it wrong and the whole business can crumble.

13. Writing accounting policy and procedure manual: accounting policy and procedures manuals are living documents that directs finance and accounting transactions of the business as a whole. This manual has to be approved by top management.

14. Customer service function: yes, this department deals with both internal and external customers. Accountants now have customer care duty to perform.

15. Budgeting and budgetary control: budgeting and budgetary control is one of the tools in the arsenal of businesses used to ensure that things are under control. By default, it is the function and duty of accounting and finance department to handle budgeting and budgetary control in a small and medium sized company.

16. Providing information for management: managers rely mostly on AIS for decision making. This information comes in various forms and formats.

17. Procurement management: there is nothing as good as having an in-house accountant manage your procurement. The reason for this is because you can be rest assured that you will be getting the best bargains.

18. Asset management function: it is the function of the accounting and finance department to manage the asset of an organization. At the very basic, they will a comprehensive asset register.

19. Managing cash flow and liquidity issues: no matter how profitable a business is, it will go burst if it does not have enough liquid cash and cash equivalent. This function cannot be left for any other department.

20. Working capital management: enterprises can improve its cash flow by simply managing its working capital properly. This is another area where accountants and finance professionals prove their worth to their employer.

21. Preventing fraud: accountants have big role to play in preventing fraud in an organization. Top managements alone cannot win the fight against fraud. All hands must be on deck and accountants should be at the fore front as we speak the language that business understands.

22. Hiring accounting and finance staff: recruitment of accounting and finance staff should not be left for the human resource management department. They might be skilled in hiring, selecting and documenting stuff, they should not be left alone do hire accountants as they might miss out on some salient points.

23. Facilitating Training of accounting staff: accounting is a living discipline that requires her practitioners to keep abreast with the ever changing accounting world. Periodic training, workshops or seminars are organised by accounting and finance department to ensure that its staff members are not rusty.

Traditional accounting departments no longer exist. What we now have are hybrid accounting departments where functions cuts across many areas like a management accountant getting involved in the decision making of acquiring IT infrastructure.

You also would have noticed that there has been tremendous increase in the functions and duties of accounting and finance department of SMEs; this also applies to every other department. Take the IT department as an example- I don’t think that we still have many traditional IT departments.