Every company/business/firm has to take some economic decisions for upcoming strategies and growth. Finance and accounting help in making financial decisions. The records are well managed and all the attributes of a business such as taxation, funding, investor’s record are recorded.
It helps in the classification of different types of financial records. These records are used for forecasting and decision analysis. In this article, let us see the advantages and roles of finance and accounting.
Roles of Finance and Accounting
- It gives a complete analysis of the current financial situation of any particular business/firm. if any vulnerability is happening, then we can get to know in advance. It helps in taking decisions according to our financial capacity. There is no need to spend more than you earn.
- Finance and accounting help in creating a budget and then working accordingly. It is also used for business forecasting.
- Loopholes and malicious activities can be detected early using finance and accounting. If there is some error in the inflow/outflow of money in any particular firm, one can detect the source and can prevent it from happening again and again.
- Finance and accounting help in creating financial discipline and will automate many processes like savings, taxation, etc. One will get to know its financial situation in advance and can take decisions accordingly.
- Finance and accounting are also used for calculating quantitative values like financial ratios. These values are derived from financial statements of any particular company/firm and are used for business forecasting and comparison.
- Finance and accounting help in maintaining proper records of your financial activities and these records are very useful at times of legal troubles or quarrels. One can show their records and can justify their opinion with proof. Proper records of taxation, cash inflow/outflow help a firm to check whether they are following the legal rules and regulations or not.
- Easy availability of loan/funding is possible if you have complete documentation.
- With complete documentation and insights, you will have a lot more control over your assets and you will be plugged into a system that will save your time, money & service.
Is there any difference between Finance & Accounting?
Accounting is used to maintain the record of each financial activity taking place. It is a day to day process and we often backtrack. It keeps the data of spending, earnings, taxation, etc. whereas, Finance is used for forecasting and using these records maintained by accounting to generate capital and choose ways which can increase return on investments. Finance is more of an analyzing job. When they both work together, they benefit a lot as aforementioned.
- There are a lot of tools/applications which are used for finance and accounting such as Sage 300, Xero, WagePoint, TSheets, etc. If you are planning to focus more on financial accounting then you will need fluency on these tools as they help in better analyzing of financial statements/decisions.
- An accountant is generally backward-looking as he has to look into details of financial activities of past to date but when we talk about finance, it generally focuses on forecasting and analysis. If any firm combines these two things then only a lot of activities like risk management, cost optimization, business forecasting, etc. can be done.
A lot of businesses, banks, corporate companies, insurance companies, etc. use finance and accounting to run their business smoothly and free of anomalies. There is a lot of demand for individuals who can dig into details and can forecast the financial situation of any particular firm/business. This article was all about the roles and advantages of finance and accounting. I hope it helps!