IT: The service that everyone rolls their eyes at in boredom, yet it’s the first place they turn to when systems fail or upgrades are needed. It’s a solid career choice – and a lucrative one. But just as with every other hard-working business owner, financial transparency ought to be one of your highest priorities.
Many businesses only consider financial transparency to be important for fulfilling your financial obligations, yet the practice actually offers some great opportunities, from fostering trust among stakeholders to improving decision-making. But how do you implement strong financial transparency?
1: Implement robust financial reporting systems
A robust reporting system is the backbone of financial transparency. IT enterprises would therefore benefit from investing in advanced financial software that uses the cloud to allow for real-time tracking of their data.
Xero and Sage are two great providers of this type of technology; with their AI and optical character recognition tools, you can also automatically capture financial information and upload it directly to your accounts, saving you a lot of time while reducing the chance of human error.
Above all, you should build a routine and schedule that you can stick to – especially if you choose to keep a manual reporting system. This will ensure that your systems are up to date. It will also mean you never have to rush at the last minute to update your information, which is one certain way to make a mistake.
2: Learn and adopt proper accounting standards
Adhering to internationally recognised accounting standards, such as the Generally Accepted Accounting Principles (GAAP) or International Financial Reporting Standards (IFRS), is crucial for financial reporting.
These standards ensure that financial statements are consistent, comparable, and transparent. By adopting them, you can work better and smarter with the knowledge that your financial information is accurate.
3: Conduct regular independent audits
Financial audit services involve a team of external auditors reviewing your financial statements and documents to ensure that you are complying with all regulatory requirements and accounting standards expected of you. Your auditors will then make recommendations to you to help you build a better reporting system.
Audits are compulsory for exceptionally large companies, but we always recommend arranging one even where it is not compulsory. You should also arrange regular audits: doing so will demonstrate to your stakeholders, creditors, and clients how committed you are to transparency.
4: Create and promote financial reports
While financial reports are only worth the accuracy of the figures used to generate them, well-crafted ones can be great tools in your ambition for financial transparency. In fact, the cloud accounting technologies we mentioned earlier can be extremely useful here, as you can use them to automatically generate reports.
With your reports in hand, you should then consider distributing them among stakeholders, perhaps on a quarterly basis. What could be more transparent than that?
5: Promote financial literacy throughout the business
Creating a culture of financial transparency begins at the top with your leadership. You must set the right tone by being open and honest about your business’s financial performance and challenges.
This openness, combined with comprehensive training on ethical financial practices for your staff, can create the type of environment any business should strive for. Your training should address a broad spectrum of subjects, including budgeting, interpreting financial reports, and risk management.
6: Consult with an accountant
Finally, IT enterprises can maintain financial transparency by consulting an accountant. These financial professionals are already well trained in accounting standards, like GAAP or IFRS, and bookkeeping. Many also work with cloud accounting software, and a significant few even offer auditing services.
In other words, an accountant will work with you to create a financial management strategy that creates a transparent system while allowing you to focus entirely on your business. In that sense, hiring an accountant is better than every other piece of advice we’ve given today combined.
Looking for an accountant who can help you with your financial management? Get in touch with us today.
