Why Accounting Isn’t What it Used to Be

When you think of accounting, what do you picture? Probably a boring, grey-haired old man in a suit hunched over a calculator, right? At least, that’s the image that comes to my mind. So it wouldn’t surprise me if you conjured up something similar.

But here’s the thing…

It turns out, accounting isn’t what it used to be. And in this short blog post, not only will I share why, but I’ll also explain what this means for you, your financing and your business. Sound good?

Why Accounting Isn’t What it Used to Be:

In the last 20 years, finance has become increasingly flexible. Bankers and businessmen have gotten increasingly creative about how they move money around, insure themselves against financial risk and account for their goods and services. But you don’t have to take my word for it.

Just look at the wave of mortgage-backed securitization that swept through the world of finance in the mid-2000s. That was a perfect example of financial flexibility at work. And if you want to get even more specific, you might enjoy this infographic from RandstadUSA that shows why Accountants are not just bean counters. The evidence is compelling.

And the truth is, if you’re using your accountant as a glorified calculating fact-checker, you’re at a serious disadvantage. Intelligent and creative accounting practices can really help you money work for you. It’s one of the ways the wealthy multiply their income, and there’s no reason you can’t do the same.

 

How to Think Like a Creative Accountant:

Now first things first, before I share a strategy for how you can think like a creative accountant, I want to remind you not to get carried away. Good accountants always operate ethically and legally. This is non-negotiable. But the difference is, creative accountants operate with the big picture in mind.

Let me explain what I mean by this:

Effective modern accountants aren’t just occupied with counting expenses, They’re managing the cash of the entire business. They understand what the most profitable sources of income are, and they appreciate how loans and liabilities can be financed to maximize cash flow. This eye for profit margin is exactly what can help you take your finances to the next level.

It’s this kind of strategic accounting that lets you really get the most out of your number cruncher. When you stop looking solely at the bottom-line and start focusing on opportunity costs you can find creative solutions to free up cash flow. And we all know that cash-flow is the lifeblood of business, right?

But don’t stop with your business. This financial best practice can also be applied to your personal life. Intelligent accounting can save you thousands of dollars when you’re buying a home, car or making any other major decision regarding your bank account. Make sense?

The point is, if you think accounting is an archaic and unnecessary part of your financial future you are sorely mistaken. And there’s no better time to improve your accounting edge than right now.

 

 

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Updated: June 12, 2014 — 9:45 pm

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