While both Accounting and Finance focus on managing money, finance strategically plans and allocates a company’s assets for future growth, while accounting meticulously records and reports past financial transactions.
Primary Implication
Every business needs accounting to prepare its financial records for tax filing. Only businesses with significant sums of money tied up in assets funded by liabilities and equity need finance talent.
Overview
Finance and Accounting are two separate business functions with two very different bodies of work to perform. At a high level, Finance is the decision science of planning the allocation of a business’ assets. Accounting is the professional practice of consistently recording and reporting financial transactions.
The primary difference between finance and accounting is that accounting focuses on the day-to-day transactions that flow money in and out of a company based on the sales and operations performed. In contrast, finance focuses on the management of assets, liabilities, and the planning for funding future growth.
Both accounting and finance professionals are interested in the control of money in a business. The difference is those leading with finance are more interested in maximizing investments and financial strategy. At the same time, those in accounting apply professional principles, and processes to consistently account for the numbers rather than influence them. Accounting requires technical skills to know how to account for the money, whereas financing requires analytical skills to determine what to do with the money.
