Proactive Accounting: Why is it Important for Your Business?

  • March 7, 2022
  • OHI

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. Proactive accounting involves understanding the patterns of a firm and analyzing its way of working.

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. This can help businesses to stand out and win over others.

A proactive accountant ensures that there is some value derived from the process of accounting other than staying compliant with taxes. He not only understands tax and accounting well but believes in making a profit for the firm and reducing the cost of expenses.

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.

Proactive Tax and accounting practices not only help to earn well but make the firm understand its key driving forces and allow the managers to rectify the errors. 

Keeping Business on the Right Track

A proactive accounting strategy helps a business plan for contingencies in addition to reserving resources for goal achievement. Adopting the right business practices and methods aren’t difficult but continue following them is a task and proactive accountants aid this by keeping the managers on track.

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. This also allows the firm to deliver proactive business services. In recent times, timely services play a make-or-break role. It is crucial for a business to provide active services to shine and win people. Proactive tax and accounting help the firm arrange appropriate funds and try new things.

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. Proper tax management is important as it allows the business to file time returns, explore loopholes and save funds. Proactive accountants are great professionals who help companies save funds. 

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. Well-organized data also takes less time to understand the strategies of the companies. This makes it easy for accounting experts to hit the right nail and devise a way for shortcomings. If the reports are constantly updated, decision-making also becomes easier. 


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 specialized niche that can help businesses increase their revenue. It is the best way to replace ordinary accounting practices if you want to grow and expand your business. Apart from maintaining accounting records, it also helps the firm alter its business strategies and work accordingly.

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