IT business and accounting are inter-dependent. While accounting uses technological tools and advancements to boost the whole process, IT business includes accounting to record, evaluate and interpret data.
One reason why the IT industry is a common receptor of such problems is, it changes dynamically in even a short period of time. To make the whole running of the industry smooth and systematic, accounting plays a significant role that cannot be overlooked. But with fast changes, accounting can get glitches very easily. Let us look at what are they and how can they possibly be solved.
Change in terminologies:
We know that to get a grip on accounting, the terminologies and what they include is essential. In the case of the IT industry, with significant advancements, the meaning of a term in accounting attributes to will change.
Staying on top of tax changes:
There are only a small team of accounting in IT industry who are not complying, but the government will turn its attention to that entire industry. In some cases, there are just a few people doing the wrong thing, but the government introduces integrity measures which affect everybody in the company. Constant changes to the tax regime mean the need of a qualified accountant to stay up to date is greater than ever.
All industries plan their budget much ahead so that cash crunches and emergencies can be avoided. But in the case of the IT industry, budgets need to be designed with more care and precision, especially if newer technologies or theories are being used. This is because it is not clear how much of the budget will be eaten up during its execution. This must be predicted, and a part of the budget must be kept apart.
Focusing on many:
Accounting should be done parallel to each project happening in the industry. There is a tendency to focus on just the major project which has the limelight, and thus errors and confusions tend to occur in the accounting of other projects if it is not done in a parallel manner.
Managing cash flow is a big problem for IT owners. According to recent survey, 82 percent of businesses fail because of cash flow problems. Small IT business owners find it difficult to earmark funds to cover recurring costs and keep the business alive. To stay on top of cash flow, analyze your bills carefully and be thorough when chasing payments from customers.
While accounting is mostly known as a difficult task, it is easy enough if the company looks after the changes and plans beforehand. Most companies hire professional accountants so that the whole process remains hassle-free. Hiring an in-house accountant can be costly, but it’s important to get a qualified professional on board at an early stage. The points mentioned above are few problems that worry the IT industry and similar factors affect other industries too and the solutions are identical as well.
If you are a small business owner or startup facing these or other accounting challenges, outsourcing your finance and accounting needs can be a viable and affordable way to deal with those issues faster and get back to focusing on what you do best. Choice is yours.