Accountant or Business Accountant: An Industry Perspective

Executive Summary 

Today in an Industry we have seen there are many areas where the management look at the Finance or Accounts function to take a lead and see that the Compliance as well as the Business Function is monitored from the Finance Perspective and Business Accountant Perspective and not just as a compliance officer or as an Accountant. When the Head of Finance and Accounts is a Chartered Accountants, especially in SME Sector or Emerging Industry or Start-up company, this Role becomes more challenging and more Remunerative if the head of Accounts and Finance is really practical enough to look at the Accounts and Finance not as a Role to analyze just numbers but also analyzing the Business as a whole. This short coverage of the preamble lets us understand industry needs may they be SMEs or Large Industries. Although in a Large Industry, the various functions are handled by various departments still the Role and the expectation from CFO is always the guiding person to the CTO or COO or the different functions unless the person wants to stick to numbers.

Role of an Accountant in an Industry in Past

The role of an Accountant 20 years before was limited to compliance with Company Law, Income Tax, Sales Tax, and Excise.  At that time Service Tax was not applicable. Concerning the above the role was largely as under :

• To Finalize Books of Accounts;
• To attend Auditors whether Internal or statutory audits;
• To attend Income Tax, Sales Tax, Excise Assessment and hearings;
• To manage Cashflow and  Fund Flows that to only limited to Applications;
• To advise on Income tax Planning of the Company and Directors of the company;
• To advise on Business Tax planning concerning Depreciation and Place of Business; and
• Other related advice to the company.

With the passage of time and the expansion of the economy of the country as well as the changes in various Laws including strengthening various Laws like Income Tax, SEBI, Company Law, Excise, VAT Service Tax etc, the Role of an Account became more compliance-oriented and Audit oriented with the addition of Tax Planning concerning Place of Business, Forms of Business, Managerial Decisions, International Taxation, Transfer Pricing etc. The Scope of the Role of an Accountant increased to undertake various decision-making skills and advice on the matter of Tax planning. If we look at just 10 years before the Role of an accountant widened and covered the following in order of business requirements:

• To Manage Working Capital;
• To advise on the Income Tax, VAT, Service Tax and Compliance of Labour Laws and Company Law in the perspective long term planning;
• To attend Internal Audits with the motive of not only compliance but fixing the Revenue leakages as well as Statutory audits with the motive of futuristic planning in such a way that the Financials represent the Health of the company;
• To see the Value chain in the company including Sales to Collection and Purchase to Pay is maintained and it will help to reduce the working capital cycle;
• To check Perpetual Inventory to fix the leakages by way of Pilferage etc and ;
• Other related matters from the perspective of Business sustainability with the Organic way of growth and mostly with the focus on Compliance.

Role of Accountant Now

Especially when we have challenges in Compliances, Connecting GST and Income Tax Details, Making Easy various functions of Compliance, Selected Scrutiny of Accounts, No Excise related compliances, Service tax merged with GST, Company Compliance made more strict, Various Audits like Transfer Pricing Audits, Tax Audits with wide coverage, Statutory Audits, ESG Audits, CSR Compliances, DSIR Compliances, Custom Related Licences, Export Documents made more stringent, Auto populated data in various Returns, Scope of TDS is widened, Increase in Business Competition and organic v/s Inorganic growth, start-up company etc the role of an Accountant in an Industry is versatile and widely spread.

There are various Divisions or segments of the company and all the segments are to be looked at as an independent business activity to capture the opportunity in future for merger or demerger or slump sale and value the business accordingly.

The expectation in this Competitive and Emerging Market: Today the expectation from an Accountant ( Let us refer to "Business Accountant" from this Line ) is to see that advice is given to the management about the growth of the various Segment of a business looking at the changes in various Laws and grab the opportunity of the change of market Scenario including managing Accounts, Finance, Taxation, Audits and Compliance.

Let us understand how the Chartered Accountant can play a Role as an advisor to the management along with managing the Routine business and compliances in an Industry.  Handling Accounts and Finance in an Industry is equally challenging today.

• Day to day Accounting and Finance function;
• Credit Limit with Bank and managing Flow of Transactions;
• Advising Business Heads on various Scenarios to grow the business;
• Advising Business Heads on various leakages in the segment;
• Advising on Working Capital Management including Inventory control, Pricing Strategy, COGS management, and Collection Management;
• Credit Policy for Suppliers as well as Customers;
• Priority to Payments to SME sectors;
• Application for Various Subsidies and various Government Incentive schemes;
• Capital Budgeting for the Assets that are sent for approval for capacity planning;
• Monthly MIS on EBITDA and PBT along with Suggestions to improve upon;
• Quarterly Growth plan and Monitoring of the same;
• Company Compliance and Board Meeting Governance
• Environmental, Social and governance;
• Export incentives and Import Licences based on the Material consumption and Exports planned. For eg. Advance Authorisation, EPCG Licence etc.;
• GST Compliance and Mismatch Analysis. Based on this Training to Suppliers and Customers on various TDS and TCS Applications.
• Training to SCM Team and Sales Team on certain sections where TDS and TCS apply including Gifts to the customers.
• Documents for Mergers, Acquisitions, Demergers and Slump Sales and co-ordination with Tax Department for the same.
• The role is also expected in the above from Presentation to Negotiation including due diligence.
• Filing of Various Returns on the MCA Site and coordination with Merchant banks for Valuation. Although in a big organization, it is done by in-house Company Secretaries it is also looked after by a Chartered Accountant in some cases.
• Yearly Finalisation of Books as per Accounting Standards, Tax Audits, Transfer Pricing Audits, Cost Audits etc;
• Certain Managerial decisions like buying or producing in-house are nowadays expected out of the CA Role. Even in some cases, the Big order is taken after going thru the capacity available and the Variable cost of the product.
• Where there is an export in an Organisation, coordination with Treasury for Hedging and Forward contracts is advised and managed. It is always expected that there should be minimum forex risk to the business.
• Various bank funding options are to be analysed and apply to banks/NBFCs according to the need of an organization.
• Internal Check is the major Role which is expected to be done by an accountant from the business perspective.
• Last but not least, arranging many MIS related to the Present Business Model and Expected Business growth.

• Today with all the Initial Technical glitches of the various Portals of Government, Chartered Accountant in Practice as well as in Industry is doing a great job in Nation building. They are an important pillar in the economic growth of a nation.
• To grow in an Industry following are some of the Steps so that an Accountant will no longer remain an Accountant but he works as a business accountant and grow in the organization as a Business head.
• Let us not be limited to the numbers. Go beyond Numbers.
• Advise on the Growth of the Business based on Monthly Profit and Loss account.
• Banking and Forex is an important Role. Have a meeting with Bankers and find out which product is more suitable for the business.
• Attend various Training related to Business Growth, Start-up funding, Income Tax, GST etc.
• Train the Team on the various changes in the Laws that will help to have a compliant company where you are working starting from ground level.
• Train different Functional Teams so that the scrap received in the form of Data in Accounts will get reduced.
• Be in the front for any kind of Investment decisions in an organization.
• Make a Checklist for the Compliances so that it can be delegated down the line and the work is done as per the calendar.
• Try to pursue In-organic growth along with growth in Existing business.
• Be a Leader in any kind of automation in an organization including ERP implementation. This will train you in every aspect of the business.
• Find out what is the cash cow of the business and see that the growth is maintained and before the maturity of that product, it is informed to the Business heads and turned into growth again in PLC Cycle.
• Do perpetual Inventory Checking on a Test Check basis and find out the way forward for Non-Moving Inventories.
• Debtors Analysis and collection we never looked into but there is no harm in going thru once in a quarter and suggest writing off or legal action to be taken in case of some Debtors are stuck.
• Foreign Currency understanding and gain in Foreign Currency management is a new area where we add the profit straight to the bottom line with our expertise.
• Be Techno -commercial experts by attending various Operations Reviews like Production/ R & D Review/ Collection / Payments Reviews.
• Upgrade with the Technology in the field of Automation of Database creation and analysing the same.
• Presentation skills we need to develop as the data can be explained well and convinced well to the audience only if we convert data into information and present the same.
• Think towards the In-organic growth of the company and be in touch with the industry where you are working. If you are working in a Pharma company, be sure that you are updated with the latest information.
• Check Government websites for Incentives including RBI packages for Interest subvention schemes etc.
• With a lot of updates and changes in Law, Tax Planning, Direct and Indirect Tax is a necessity for the company.
• Valuation, Mergers, De-mergers and various ways of alliances are necessary for any organization to grow fast in the same or the other diversion. Think of Horizontal/Vertical or unrelated mergers.
• Be the part of Due-diligence team for Technical, commercial and Financial due diligence.
• Negotiation is an art where we can use various tools like PE Multiples/ PB Multiples/ EBIT-EBITDA Multiples and get the Valuation at the required level.
• If it is a start-up company the role of CA is more challenging to deal with various laws and sections like Angel Investment, Separate valuation criteria, Various exemptions in various laws etc.
• Forex-related Information one should always have to see that there is no loss in Forex in this volatile market and the Knowledge of EDPMS/ IDPMS/ Bills of Exchange/ Hedging/Forward contract can add profit to the bottom line.
• Last but not least, be always ready to take on challenge of any kind in the organization

Conclusion

As we are aware that slowly and gradually AI will take over the normal accounting task, Finance is available at ease with the growing economy, Regular Filing of Returns is getting day by-day connected and auto-populated, Monthly and Quarterly Returns are now easily handled by down the line team or Data entry operator with checking at our end, it is very imperative that we need to apply our mind and whatever we have learnt in our curriculum to the Business. This will make an accountant a Business Accountant and will grow in an organization faster than the normal accountant who just follows numbers. Application of Knowledge in practical aspects only gives growth to an individual to become an Intrapreneur. So Let's become the Intrapreneur (a Business Accountant) in your field to avoid rejection from the market due to various digital (AI) based accounting.

Disclaimer: The above aspects are taken mostly from the practical experience of an author who worked from an Accountant to a CFO in the company. Referred to various practical incidents that happened in the practical experience of the Last 30 years. Please note that it is prepared for general understanding and not for specific Industries. So it is prepared just for reference and can be referred to only with the proper guidance of some experts. One should not act upon the information contained in this article without obtaining expert and professional advice. Further, no representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this article.