When it comes to running business accountants and finance managers form the pillar of strength. We simply can’t do without them. They are the invisible caretakers of the business without which the financial situation of the company would be in jeopardy. Arnon Dror , Portland that although they are essentially similar in nature and require similar kinds of educational qualification, credentials, and license yet they markedly vary from each other.
More often, we think that employing an accountant will take care of all our financial problems but that is not the case. He or she might be able to sort your finances and helps in running your business yet they will fall short as the financial manager of the company. For this, an added level of expertise is required along with management skills. Therefore, accountants and finance managers are similar but not the same. Here are some points, which will clear the air regarding this confusion and help you in differentiating the two professions.
Financial management deals with the future
Both the profession is related to sorting out finances but at different levels. Accountants primarily work at an individual level and deal with things privately. Their job is to make financial reports and statements, tally the expenditure and the revenue collection, fill in the taxes etc. Thus, it deals with the past financial condition and its present outcome. Finance managers take it to the next level. It is often regarded as the more classified field of accounting. In financial management, the stress is more on the future prospect. The key here is to read between the lines and find new prospects. Read the market trends, get insights from the financial report, and get to know what’s working for the company. Thus, it’s a broader field which ties up the past, present, and future into one string.
Financial management takes care of asset distribution
Arnon Dror says as we all know it, accountants have to follow GAAP, that is, the Generally Accepted Accounting Principles and sort out finances according to it. Finance Managers too have to follow this rulebook but their area of expertise differs markedly. While the accountants manage the company assets and maintain the steady cash inflow along with tracking the finances and making reports, the finance managers take care of the distribution of these assets. How to draw up investors, budgeting, paying up the creditors, analyzing the financial situation, balancing debts – all fall under their jurisdiction. Thus, finance managers have to keep in mind a larger perspective and act accordingly.
Accounting is part of financial management
Lastly, accounting is a part of financial management. Rather financial management is an evolved form of accounting. Accountants work in their personal capacity by sorting out fiancés, reducing expenses; tally the balance sheet, filling the taxes etc. They primarily work as individuals under a person. Finance Management, on the other hand, deals with the overall financial outlook of an organization. These managers work as head of the finance department and manage economic affairs under whose guidance the accountants work.