Between year-end, New Year resolutions, and tax season; this is a popular time for accounting. In both our business and personal lives we are taking a closer look at our finances. Receipts are carefully organized rather than stuffed in glove compartments. Budgets are being created and financial statements meticulously examined.

But much like our diligent flossing begins to dwindle a month after each dentist appointment, our focus on accounting begins to take a back seat as the year goes on and we are sidetracked by other projects and deadlines. So, as we enter deeper into 2011, let’s take a look at why the financial health of a company is so important, and what we can do to avoid breaking our financial resolutions.

Beyond reporting and keeping things in order, accounting can be an important tool to create a competitive advantage. While sometimes seen as a necessary evil, accounting can do much more for your company than keep things running smoothly. Proactive accounting practices give you the ability to diagnose problems early and improve overall performance. Accounting provides a comprehensive understanding of where income is being created, how cash is being utilized and what is needed for expansion. This information can be used to redistribute funds, optimize cash flow and find new opportunities.

I’ve often heard people joke, “I wish they’d taught me to balance a checkbook in high school.” This speaks to a lack of understanding of basic accounting principles. One of the reasons accounting tends to be underutilized is because those outside the department do not understand it. Likewise, those in the accounting department can often become isolated from other parts of the business. In the wake of downsizing, many employees have begun to take on different roles in their company. The silver lining here is that increased communication between departments can lead to the creation of a system where information is more easily disseminated and can be presented in a way that is easy to understand.

We have resolved to keep our financial resolutions for 2011: Begin with clean financials, specific goals and a clear budget. Develop procedures that provide employees with necessary information in a way that they can use it.

Like our physical health, the financial health of a company should be maintained year-round.