What is Corporate Accounting?
Accounting has many levels and versions. One such version is that of corporate accounting. Find out exactly what corporate accounting means here.
The importance of accounting
Anyone with experience running a business knows that solid accounting is crucial. Accounting helps to keep up your company’s finances and records accurate and up to date. These records help to identify the current financial state of your company and help determine your company’s future. Inadequate or insufficient accounting and bookkeeping leads to financial difficulties requiring additional outside funding to repair your finances.
However, there are a few different versions of accounting. One of these is known as corporate accounting.
What does Corporate Accounting mean?
We define corporate accounting as the branch of a company that handles its various accounting tasks and issues.
Unlike traditional accountants, corporate accountants provide a tremendous service to your company. Some of their tasks include:
- Preparing accounts
- Creating cash flow statements
- Analyzing financial reports
- Consolidating balance sheets
- Researching the benefits of potential absorption or amalgamation
Normally these corporate accountants work in a team or department under the supervision of a Chief Financial Officer. However, it’s not uncommon to see one person undertake a company’s entire corporate accounting responsibilities.
Corporate accountants are normally concerned with only one client. They are responsible for ensuring all financial activities of a company fall in line with the various laws and regulations of all oversight.
What is the difference between Corporate Accounting & Public Accounting?
The largest difference overall is the number of clients. A corporate accountant works for one client and reviews all matters relating to their financial records and transactions. As a company grows, these responsibilities grow and require entire teams.
The role of a public accountant is much different. Public accountants work for a firm that sells its accounting services to members of the public. So a public accountant might have a large number of clients.
For most accountants, their path begins as a public accountant to gain knowledge and experience. The foundation and reputation help them pursue a corporate accountant position at a company specializing in a non-financial industry such as manufacturing or retail. The differences between the two are easily summed up as follows:
- A corporate accountant works for a client in a specialized industry, while a public accountant works for an accounting firm.
- A corporate accountant works for a single industry, while a public accountant maintains a large and constantly changing base of clients.
- A corporate accountant specializes in the specifics of the industry they work in, while a public accountant needs a wide variety of skills and knowledge to serve their various client’s needs.
- A corporate accountant can become a Chief Financial Officer (CFO) for a company, while a public accountant can become a partner or owner.
Corporate accountants have more of a stake in their work month-over-month and year-over-year because they can implement change and create process efficiencies in an organization. Public accountants generally deal with what they are given and work to improve within those limitations.
Some of the most capable corporate accountants have experience in public audit or consulting because its important to understand how all businesses operate as a whole. They typically gain the skills and adaptability needed to accommodate changing business needs.
What are the common responsibilities of a Corporate Accountant?
A corporate accountant’s responsibilities largely depend on the company where they are employed. An accountant working for an international conglomerate valued in the billions has more responsibilities than an accountant working for a smaller, family-owned, and operated company. However, most corporate accountants work the standard “9 to 5” schedule.
Some of the universal responsibilities of a corporate accountant include:
Almost every accounting job for every client requires some version of basic bookkeeping. Keeping a client or company’s financial records and reports organized and cataloged is one of the most fundamental aspects of being an accountant.
For larger companies, a team of entry-level accountants takes these responsibilities from the more knowledgeable and accomplished accountants.
Generating extensively detailed reports
The accountant team generates up-to-date reports that properly illustrate and explain the current financial situation of a company. The executives and decision-makers of the company use this information when determining the next steps in their business strategy.
These reports require the compilation of extensive information from throughout the corporation. For these reports, they’ll consider all aspects of the business. The data is collected from various departments, divisions, and off-site locations to generate accurate reports.
Examining finances and advising future endeavors
Since a corporate accountant spends their entire day looking into information relating to one company’s finances, executives and decision-makers find their advice helpful when considering future projects and additional corporate investments.
The accounting team is the first to see whether or not a new product line or investment is successful. This team is also the ones who notice if the overall finances are trending upwards or downwards.
For these reasons, corporate accountants closely examine potential future endeavors to determine if they are a safe investment or too risky.
Creating and maintaining budgets
Corporate accountants are essentially the bank vault of a company. They handle all the money, and nothing is received or paid without their knowledge. As a result, a corporate accountant is a prime position for creating the budgets for the company and its departments.
For example, if they notice the company saves money by only buying supplies from one vendor versus another, they recommend switching to the vendor with lower prices. Whatever the case, accountants are heavily involved in creating and managing the budgets of their specific companies.
Managing accounts payable and account receivable
For corporations, it quickly becomes difficult to keep track of the accounts payable and accounts receivable. Mistakes in this area result in severe repercussions, and that’s why entire teams of corporate accountants manage them.
‘Accounts payable’ refers to the payments that the company must make to an outside entity. This includes bank transfers, checks, wire transfers, or credit card payments to purchase supplies, pay contractors or employees, rent, taxes, or utilities.
Alternatively, ‘accounts receivable’ refers to the payments coming into the company from an outside entity. These include purchases, bills, payments, loans, or other debts. In some cases, you can assign a corporate accountant to handle all past due accounts and attempts to secure the funding and close the account.
Processing employee payroll
Although typically an HR responsibility, corporate accountants can often be involved with the payroll processing of their company. Whether calculating employees’ salaries, taking care of payroll taxes, distributing the money of employee retirement accounts, or paying the correct taxes, it’s not uncommon for an accountant to provide some assistance.
These tasks might be required weekly, bi-weekly, monthly, or quarterly, depending on the company’s needs.
What are the qualifications to become a Corporate Accountant?
Obtaining a Bachelor’s Degree in accounting or finance is the first step to becoming a corporate accountant. Another crucial step is gaining real-world experience. Some students work an entry-level accounting position while in school, getting their degree.
Once you receive your degree, you can continue school for your Master’s Degree or become a licensed Certified Public Accountant. Keep in mind that it takes time to build up your experience level and reputation to become a corporate accountant when you enter the job market.
However, you can get your foot in the door by starting as a general bookkeeper, auditor, budget analyst, or staff accountant. Any accounting-related job is a good starting point to building your career as a corporate accountant.
Corporate accounting is a fundamental backbone for large companies and corporations. Without a qualified and capable team of professional accountants handling their financial affairs, most companies quickly find themselves in desperate need of additional funding to keep their business running.
Although it is stressful and requires tremendous attention to detail, you need corporate accounting to ensure your business’ success. Contact Ampla today to hear how we help provide accounting and financial solutions for your company.