Corporate accounting is a special kind of accounting meant for businesses to record and monitor money movement. It deals with analyzing, classifying, collecting, and presenting a company’s financial data.
Knowing how corporate accounting works and its role in facilitating the growth of a business is important because it plays a fundamental role in the smooth functioning of business financials.
What is Corporate Accounting?
Corporate accounting refers to the process of recording a company’s financial transactions. It is a process of documenting expenses, incomes, sales and purchases over a specific time period.
There are many different kinds of accounting – tax accounting, cost accounting, management accounting and more. Corporate accounting is one of these branches that help create the big picture of how money moves.
Let’s take a deeper look into the importance of corporate accounting.
Importance of Corporate Accounting
Corporate accounting is critical to the successful functioning of a business.
- Registered businesses are required by law to disclose their finances to the concerned regulatory body – in India, this would be SEBI or the Securities & Exchange Bureau.
- Corporate accountants help businesses maintain these financial statements according to the compliances and laws of the land.
- Corporate accounting helps businesses communicate important financial information to stakeholders.
- It forms the base for management accounting, which helps managers make well-informed decisions for the business.
Process of Corporate Accounting
Create Company Accounting System
The first step in the corporate accounting process is to establish a system to record financial transactions.
In today’s era of digitization, most businesses opt for accounting software to automate accounting. There are many accounting tools on the market, like ZohoBooks and Tally.
Fintech tools like RazorpayX even offer current accounts with direct integrations to accounting software.
Learn more: Accounting Integrations with RazorpayX
After the accounting system has been established, the next part of the process is to begin recording transactions. All transactions – sales, expenses, investments, loans, income and purchases are recorded first as journal entries, then put into the ledger book.
This process is made significantly easier with accounting software, especially if your business has a current account directly integrated with accounting software.
All aspects of payroll management fall under the purview of corporate accounting. Corporate accountants calculate employee salaries, benefits, taxes and compliances. They also ensure that these expenses are accounted for in financial statements.
Special Expense Management
The management of special expenses also falls under the purview of corporate accounting. In order to be compliant with business regulations, firms are required to initiate special payments like performance bonuses, employee-related tax, payment for overtime etc.
Such responsibility is maintained under corporate accounting. The accounting book reflects that the payments are computed well, managed and cleared out on time.
Accounts Payable Management
The corporate accounting department also regulates the receiving and processing of the company’s incoming invoices. Based on the predefined payment mode, the accountant proceeds to clear out payments to the suppliers or contractors. Common instances of accounts payables are credit card payments, electronic payments, bank transfers etc.
With RazorpayX, it has become convenient for businesses to clear their payables and improve their financial condition. Offerings like the RazorpayX payroll facility enables businesses to automate payments in advance, offer insurance plans to employees and streamline business operation.
Accounts Receivable Management
Corporate accounting also deals with accounts receivables where accountants manage the payments that are coming from the client’s end. Further, instances of bad debts and defaulters are managed by a corporate accountant.
In well-established companies, a big team of accountants are assigned to deal with past-due accounts and secure business funding. Accounts receivables include payments, loans, purchases etc.
Corporate Accounting as a Career
Corporate accountants play a very important role in ensuring financial success for a business.
To be a successful corporate accountant, you will need a combination of technical accounting skills, analytical abilities, and soft skills to handle various financial responsibilities and interact with stakeholders effectively.
Corporate accountants in India are required to have a degree in finance or accounting or be certified as a Chartered Accountant by passing the required CA Exams.
Corporate Accounting for Your Business
Accounting today is easier than ever. All you need is a current account for your business to make banking easy, and an accounting software, to make accounting easy!
RazorpayX Current Accounts are designed for the needs of Indian startups, to make banking and finance as seamless as possible.
- Smart payouts with bulk payout capabilities
- Escrow account, Banks, Trusteeship services & Automation all in one place
- Forex services to bring foreign funding to India with expert assistance
- Payroll management with automated compliances
- Super-easy, automated tax payments
- Invoice and Vendor Management completely automated
What is the difference between corporate and public accounting?
The major difference between corporate accounting and public accounting is the client number. In corporate accounting, a corporate accountant will look after all the financial records and transactions of one client. On the other hand, a public accountant deals with multiple clients and is generally related to government jobs and agencies.
What is the role of a corporate accountant?
A corporate accountant helps in basic bookkeeping, extending insights regarding financial analysis, planning budgets, preparing financial reports, management of expenses and account receivables etc.
What are some of the advantages and disadvantages of corporate accounting?
While corporate accounting monitors business budgets, this means of accounting takes only monetary terms into regard. Though the accounting process facilitates and improves business decisions, it might involve redundant paperwork.