The Difference Between Accounts and Finance
When it comes to the financial side of a business, there are two main functions that are commonly confused with each other: accounts and finance. Both are important and necessary for a business to be successful, but they differ in their scope and purpose. Here, we will outline the key differences between accounts and finance to provide a better understanding of each role.
Accounts
Accounts refers to the process of recording, classifying, and summarizing financial transactions to generate financial statements. This includes balance sheets, income statements, and cash flow statements. The main purpose of accounts is to monitor the financial performance of a company, track its assets and liabilities, and ensure that it complies with relevant accounting standards.
The accounts team is responsible for managing day-to-day bookkeeping activities such as recording transactions, reconciling accounts, and issuing invoices. They also prepare financial statements on a regular basis, offer advice on tax compliance, and maintain accurate and up-to-date records of all financial transactions.
Finance
Finance, on the other hand, refers to the process of managing a company’s money, assets, and investments to ensure that it achieves its financial goals. This includes making decisions on how to raise capital, managing cash flow, conducting financial analysis, and monitoring and minimizing financial risk.
The finance team is responsible for forecasting financial trends, developing budgets, and creating financial models to help make strategic decisions. They also manage investments, debt, and other financial instruments to ensure that the company is making the most of its financial resources.
The Key Differences
The main difference between accounts and finance is that accounts focuses on recording financial transactions and creating financial statements, while finance focuses on making strategic decisions to manage a company’s money and assets.
In practice, this means that the accounts team is responsible for ensuring that a company’s financial records are accurate and up-to-date, while the finance team is responsible for developing financial strategies that help the company achieve its goals.
Conclusion
In summary, while accounts and finance are both important functions of a business, they serve different purposes. Accounts focuses on recording and summarizing financial transactions to produce accurate financial statements, while finance focuses on managing a company’s financial resources to achieve its goals. Understanding the differences between these two functions can help businesses better manage their finances and make informed financial decisions.
Table difference between accounts and finance
| Accounts | Finance |
|---|---|
| Deals with recording, classifying, and summarizing financial transactions of an organization. | Deals with managing the monetary resources of an organization. |
| Focuses on past financial data for decision making and analyzing business performance. | Focuses on present and future financial data to make decisions related to investments, funding, and financial planning. |
| Includes functions like bookkeeping, preparation of financial statements, and maintaining ledger accounts. | Includes functions like financial analysis, budgeting, forecasting, and risk management. |
| Does not involve decision making related to financial planning. | Involves decision making related to financial planning. |
| Examples of job roles in accounts are accountant, bookkeeper, and auditor. | Examples of job roles in finance are financial analyst, investment banker, and risk manager. |