Proactive Accounting: Why is it Important for Your Business?

  • March 7, 2022
  • admin

Accounting forms the backbone of business health. While many accountants work diligently to ensure that errors or blunders do not happen, many businesses still believe that their accountants work reactively rather than proactively. In fact, in a study conducted by Wasp Barcode, it was found that about 47% of the small and medium-sized businesses surveyed believed that their accountants weren’t proactive.

Do you think the same about your accountant?

The writing is on the wall: there is a need for a factor over and above sincerity and diligence in accounting. The number-professionals need to think a step ahead and generate that missing value for businesses in their accounting services. Let’s see how proactive accounting is beneficial for your business.

What is Proactive Accounting?

While plain accounting involves nothing more than punching numbers and getting taxes done on time, proactive accounting goes the extra mile to actually be of strategic use to a business.

A proactive accounting professional is able to crunch the numbers of the present but also to extrapolate them into the near future to get an idea of where the sheets of a business are going. Such a professional helps businesses strategize their finances better and proposes ways to save on taxes and time by studying spending habits and earning patterns.

A proactive accountant ensures that there is some value derived from the process of accounting other than staying compliant with taxes.

Benefits of Proactive Accounting?

Proactive accounting provides 5 major benefits to a business. Let’s discuss them below.

Understanding Key Drivers of Profits

A proactive accountant doesn’t just process the numbers on a cash flow but also analyses them to identify the key areas of a business that generate good returns. This professional also identifies where an investment didn’t pay off. This helps in allocating resources better in the long run.

Keeping Business on the Right Track

A proactive accounting strategy helps a business plan for contingencies in addition to reserving resources for goal achievement.

Say, for example, an unprecedented lawsuit came in where settlement was needed; situations like these could create a big dent in the financials – it is the job of a proactive accountant to keep the finances ready when they are needed.

Empowering Exploration and Experimentation

Knowing that the cash flow is steady and accounts are well-managed, businesses can venture into new avenues and explore novel branches for growth and expansion.

Proactive accounting helps arrange cash flows in a way that makes room for a business to have a corpus for growth.

Managing Taxes

Proactive tax accounting doesn’t just deal with the taxes your business owes but also considers how liabilities can be reduced while maintaining the profits at a maximum.

It involves gleaning a lot of insight from studying the financial statements of a company and strategizing for tax savings and reducing liabilities.

Taking Quick Decisions

Proactive accounting involves maintaining the company’s books as close to real-time as possible, which means the data is more or less always updated.

This helps the administration with decision-making when needed, backed by the latest updated data.


Proactive accounting finds favours with businesses where a long-term relationship is sought. These professionals are an asset to a business rather than just professionals who work the books and take care of taxes.

Proactive accounting is thus a specialised niche that can help businesses increase their revenue.

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