Many people confuse the terms accounts and finance. Very few of them take out time to figure the meaning and significance of each. First things first, both are a primary need for every business and corporation working in any part of the world.
Thus, for businesses, it is essential to not only understand the different accountancy terms and services for their companies but also recognize the role the relevant professionals can play for their workflow and profitability.
This article aims to introduce you to the differences between accounts and finances for the benefit of your business.
Five differences between accounting and finances for a business
While accounts and finances are both an essential need of any business, the distinction is an important one to make. Businesses in the UAE have realized that indulging in professional services for these areas is their safest bet to sustain in the hustling market. If you run your company there, you can get in touch with one of the reputable Bookkeeping and accounting firms in Dubai to ensure the stability of your organization in a difficult environment.
Key differences between the two kinds of services are as follows:
1. Viewpoint
Accounting is backward-looking. It involves all the data related to affairs that have already occurred. From salaries, overhead and operational costs to the expenses of value addition to the product or service that your business provides. Finances are forward-looking. These are aimed at transactions that are yet to occur. This helps make key business decisions pertaining to the future and predict the performance of your business with the help of projections.
2. Focus
All workplaces have a distinct environment and different sets of practices that keep their affairs going. But the flow of data and information can have inaccuracies in it. This is where the role of accounting comes into play. Accounting services enable you to deal with data with an ensured accuracy and reliability, which adds to the credibility of your organization and business. Finance deals with Insights, and analysis of the data that accountants and bookkeepers manage for your business transactions and
3. Financial statements
Accountants prepare the financial statements and help preserve these statements, and finance professionals are responsible for the analysis of those financial statements and making use of these statements to the benefit of your business.This is the most defining explanation of the functions of both the services. While both are easy to distinguish in this way, the latter cannot be carried without the former. Similarly, there is hardly any use of well-kept books and records if not used for insights and projections.
4. Purpose
Accounts are mainly concerned with communicating the financial position and the current standing of the accounts of your organization. It is aimed at keeping a record of what has been spent on what and what is left there in the official account. Finance is about taking the reins after the accounts are ready. The purpose of finance is the analysis and figuring out ways to add value on the basis of account data.
5. Thought process
Accounts are rule-based. They are majorly about record-keeping of what has transpired and what is there at hand to be managed. All of this revolves strictly around the rules of mathematics and statistics. Safe to say, accounting and audit firms in Dubai are about numbers and record keeping. Finance, on the other hand,is analysis based. It helps pave the way for key business decisions. With the analysis of finance officials, you will be able to decide whether your organization can afford to invest in a new venture or it can afford an expansion of the team.
Feeling aware of the accountancy terms now?
Accounts are too tedious, an area even if you take a look at a few terms. But if you are a business owner, you need to develop a basic understanding of those terms to the extent that you gain awareness of your business needs.
Your business needs finance professionals and well as accountants. If you outsource these services, you may invest a little. Especially if you are seeking a well-reputed service provider, you will have to pay a good amount, but it will be worth it. Your workplace will have ensured the accuracy and reliability of data and information maintained.
You will have better insights into the financial standing of your business, and you will also enjoy a better level of credibility among your customers with the help of increased transparency and no misrepresentations.
Accounts and finance while distinct but are complimentary to each other in many ways. They are different in viewpoint, purpose, focus and thought process. But if one is about data preparation, the other is about analyzing that prepared set of data. Thus do not undermine the importance of any one of them both.