They may be disparagingly called ‘bean counters,’ but accountants are just as skilled and knowledgeable as lawyers and doctors.
Most people confuse bookkeeping with accounting. Bookkeeping is one of the tasks of an accountant and consists of recording all the transactions that a business does. It has increasingly been automated from the 70s, and the core task of bookkeeping no longer requires an accountant.
The task of a modern accountant is focused on these aspects:
- Company finance and cash flow
- Analysis of how each dollar is earned and how each dollar is spent
- Can the business process be optimized for more returns?
- Is there pilferage and corruption at any stage?
- Does it make sense to borrow or raise share capital?
- How to plan income and expenditure around taxation laws?
Also, for every limited liability, a company needs an external auditor to verify that the books of accounts are correct.
Let’s check out what are the essential skills that an accountant needs to be successful at his/her profession.
1. High IQ
This is not meant as a slight to those who find thick textbooks to be daunting.
Unless one can study the nitty-gritty of different types of accounting – management, cost, corporate, financial – and has the ability to memorize vast lists of extremely complicated direct and indirect tax, along with a fair bit of economics and mercantile law, it is not possible to obtain a top-end accounting certification.
The best ones like Certified Public Accountant (CPA) is considered to be among the toughest exams in the world.
It needs a fair bit of academic excellence to qualify as one.
2. Leadership Skills
Accountants seldom work alone. Even if they are the only certified professional in a small enterprise, accountants need to train and lead a variety of clerks and apprentices about the process of invoicing, billing, ledger, cashbook, debit note, credit note, returns, receivables management and a plethora of other topics.
Since these are complex concepts being explained to absolute laymen with high school education and some class of community college certification, it requires persistence and patience to train them.
Any mistakes on their part would ultimately reflect on the accountant. Since the work carries stiff penalties from the tax authorities, the management would not look kindly upon any error, no matter how unintentional.
3. Ability to Adapt
Where there’s business, there’s finance, and as a consequence, there’s a need for skilled accountants. Each has a different way of accounting. Such as, an airline will try to increase revenue per seat, while a steel manufacturer will try to lower the cost of production per ton.
New businesses like online retailing and online food delivery have other metrics. For each of these sectors and jobs, the accountant needs to adapt to a completely different environment.
How hard is it? Most find it hard to migrate to Windows to MacOS and vice versa! Accountants do something a million times harder when they change sectors. A change in comprehending the taxation structure alone of each industry requires a huge focus.
4. Ability to Organize
Every transaction has a place somewhere in the hundreds of ledgers. All of these hundreds of ledgers together represent the financial health of the business.
An accountant has to be well organized. They need to have a flair for numbers and an equal ability to decide which bin to put those numbers in.
Since most companies have a change in cash flow occurring at every moment, the accountant has his hand on the pulse of the business. It is up to him to immediately alert the CEO about any potential problem on the horizon, and it is his enormous meticulousness with data that makes him stand out.
5. Ability to Comprehend
It is the task of an accountant to figure out the cost per unit of anything. Deciding what it costs to send a cell phone from a factory in Wuhan to a buyer in Amsterdam requires a study of the entire logistics chain.
But that is not in the domain of accounting. At different stages of his/her career, an accountant would be required to understand sales, marketing, advertising, business forecasting, labor laws, logistics, and even difficult technical shop floor processes.
This ability of cross-domain understanding is what sets an accountant apart from someone working in R&D or HR.
6. Ability to Simplify
The tax concepts around which an accountant does most of his work are very complex. There are myriad laws, multiple slabs, and lots of fine print.
An accountant has to not only find the least expensive way to run the business but also be able to define it to the CEO and other top managers in simple language.
While most verticals declare and deliver in metrics – for example, produced 10 million tons of steel, sold 15 million cases of Pepsi, an accountant is one who needs to first describe in near layman’s terms what he wants to accomplish and then achieve it over a quarter, half-year and year.
7. Ethical Integrity
A CPA or accountant is required to certify books of accounts. If they are not trustworthy, then the whole business is doomed. A gigantic accounting firm Arthur Andersen closed in 2001 due to the complicity of some partners in the Enron scandal.
Every accountant working in a listed company can profit out of trading with insider information. But they are trusted not to do so. Trust is the stock in trade of accountants. If they are not believable, their work is not good enough. It takes years of dedicated practice to establish this reputation.
For those who are hard-working, and can crunch numbers long into the night are ideal for becoming accountants.
They are the unsung heroes of the business world. Rarely does a board make a CFO into a CEO. It is usually people from marketing and product development that are considered to be the heroes.
But on the other side, the median pay of accountants is very satisfactory. They mostly work in an office, and there is very little fieldwork. Most of the time, they are able to maintain an excellent work-life balance, and though they may not be office celebrities, most owners recognize their stellar contributions.