This article is about Banking and Finance
Accounting Vs Finance – Important Differences Explained
By NIIT Editorial
Published on 08/04/2020
Finance and Accounting are the resting functions of a business venture that actively participate in preserving and allocating revenues. Students considering a career in either discipline should possess a sound understanding of the nuances and job responsibilities that come with their respective packages. But due to the two terms being used interchangeably, it is imperative to understand the difference between accounting and finance to make a career choice based on fact, not fiction.
It’s easy to answer ‘what is financial accounting’. Consider this the discipline that engages in micro-managing cash reserves. While the sole motive of a for-profit enterprise is to maximize profits, it is equally savvy of them to astutely manage capital preservation and expenditure to full-fil their statutory obligations. Under this umbrella of regulatory measures, Accountants ensure a smooth bookkeeping process, reconcile taxes and audit institutional/client ledgers periodically for consistency with the state laws. Accounting concepts and principles tend to appear backwards in their process flows, as professionals work on toes to maintain synergy between the past and present balance sheets.
From the standpoint of disciplines, Finance assures a judicious allocation of the cash reserves in hand. The prerogative of an accounts division is to educate you on how to save income and to identify best-fit investment sectors for this capital. It would not be incorrect to point out that Accountancy Units process numbers and broadcast results that are subsequently acted upon by Finance teams to draw insights and analysis from. Although boundless by the legal purview, professionals employed in this vertical are encouraged to make predictions that significantly impact budget allocation proceedings of an organization.
Finance vs Accounting
It would be wrong to pit one against the other given the interoperable relationship between finance and accounting. However, a general comparison of the role offerings should serve the purpose of job seekers and fresh graduates in picking a career stream when comes to finance vs accounting.
Enterprise hierarchies display a good distinction between the two departments with Finance leading marginally in terms of pay. Yet the variety of roles offered by the two fields is impressive and elaborate enough for the neutrals to consider a career in either.
Roles for “Finance” Professionals
Beginning with Finance, professionals are expected to work under designations such as:
Tasked with processing financial reports along with ancillary operations of budgeting, reporting, investing and risk management. They often play a crucial role in drafting financial reports and maintain any and every account-record of their client.
- Tax managers
They administer tax audits and keep stringent checks and balances in place to ensure the institution does not default at the compliance end. More often than not, they bridge the gap and relay tax policy measures to and fro from the boardroom to company frontlines.
- Financial Analyst
Work on operational data and derive standard costs to mitigate overheads. It is their responsibility to maintain a level playing field between projected forecasts and plans. Analysts perform variance analysis and identify trends to make recommendations.
- Financial Advisor
They develop financial plans integrating data points such as income, insurance, tax status, and risk tolerance to name some. The same is then pushed further down to formulate insurance coverage, investment planning and cash management.
- Money Managers
They undertake to manage the securities portfolio for institutional clients. Simply put, they make the final call on when to purchase an asset and when to sell. Therefore, it comes as no surprise as they are expected to have exceptional R&D skills.
Businesses covering every nature of work from government, non-profit, and for-profit to enterprise or a start-up, all have the aforementioned roles as treasures for safe-keeping. That translates into a myriad of opportunities for new entrants or seasoned workers into such fields.
When it comes to being an Accountant, there are still a varied array of entry-level positions open to graduates.
Roles for “Accountant” Professionals
- Budget Analyst
It is an entry-level role and practitioners are also referred to as Budget Accountants. Their primary responsibilities include tracking payrolls, managing financial records/assets, evaluating Organizational Finances, monitor financial trends, and develop budgets.
- Junior Associates
They have the option to choose between operating individually out of a sole proprietorship or joining an accounting firm instead. They could be tasked with preparing taxes, offering financial advice, financial reporting, income audits, and reconciling financial records such as credit reports and legal compliance.
- Accounting Clerk
They keep a track of and update transaction details of an organization, eventually calculating the interest rates levied on an account. They act as a central source of issuing payments to third parties/organizations. As they do so, they become the safe-keepers of financial receipts maintaining regular communication with contractors about billing. All the concerns regarding invoicing/billing are handled by Accounting Clerks.
Their Key responsibility area includes tracking customer/client accounts. Bookkeepers accomplish this by recording financial transactions, generating fiscal records, and reports. Being a bookkeeper involves one to multi-task, wherein their incumbent company might ask them to prepare tax documents, invoices and bank deposits. Although Budget Analysts take care of the pay-roll needs, the same could also be passed down to a bookkeeping professional.
For questions’ sake, people tend to enquire about accounting vs banking, yet that doesn’t make sense as one is part of the other
Professionals with accounting and finance degrees, earn a good salary. Accountants, especially in India, should look to become a major from the Institute of Chartered Accountants of India (ICAI). The process ideally takes about 4 years provided the student clears the yearly exam in the first attempt.
Finance generalists should also explore alternatives that enable them to emerge with multi-pronged credentials of both accounting and finance. NIIT’s Post Graduate Programme in Applied Finance and Accounts with GST (PGPAG) is precisely designed to accomplish that motive. Experiential learning in computerized accounting, business analytics, Taxation with corporate finance & management accounting create robust candidate profiles ready for the BFSI industry.
Which is better, Accounting or Finance?
Put simply, to each its own. If you find churning numbers to process financial reports and records for enterprises, then choose a career in accounting. On the other hand, if your interest lies in forecasting projections and based on that saving company expenditures, then choose finance for a career. Hope this settles the case for accounting vs finance.