Differences between accounting and financial management

Although they function as complementary pieces and are closely linked to the company’s numbers, financial management and accounting are different functions. Do you have to make capital decisions or provide the data to the Tax Authority? Is your need to make a balance sheet or decide how much money will be invested?

Many entrepreneurs are still confused by questions like these. But the results leave no doubt: companies that work with financial management and accounting as allies make better decisions and increase their profits. That is, when the differences between the two areas are understood, the company invests better and more easily foresees and avoids problems arising from financial unforeseen events, which is directly reflected in increases in competitiveness.

Distinctive Focus

Both activities work with the information generated from the day-to-day transactions of the company. However, the main difference between accounting and financial management – or treasury management – is in the focus of each one.

Financial management focuses on the company’s money, what financial availability and how it will evolve in the future. The latter works alongside management and the presidency, warning of potential liquidity problems, late payments, opportunities for financial investments or availability for investment in the company’s growth. Accounting is focused on correctly fulfilling tax obligations, formally recording outstanding amounts between the company and its customers and suppliers, among other responsibilities.

Due to the nature of his work, the professional responsible for accounting, the accountant, needs to be more attentive to the past: what has been spent, what has been invested, what taxes have been paid, what debts have been outstanding … Meanwhile, the financial manager is more connected to the present and, especially, to the future. Based on the data provided by accounting, he accesses the information circulating in the company at that moment to build his analyzes – which is possible to be done in real time, thanks to the high level of automation offered by online platforms, such as MagniFinance.

Complementary Results

The accountant’s role is an indispensable activity for the proper execution of treasury management. It is practically impossible to plan the financial future of the company if the manager does not have the correct and detailed data of the transactions carried out recently. In addition, accounting takes care of the company’s relationship with the Tax Authority, making sure that all obligations are being fulfilled within the legal term.

The results of financial management continue the accountant’s work. In line with the flow of payments, the treasury is able to point the way forward. An example is the need for a loan. From all the data, coming from accounting and financial management software, the manager assesses and will need to ask the bank for financing.

Another situation is investment. Good financial management can point out the best investments for the money that is stuck in the company’s account. This happens when the company has already paid all suppliers, taxes and salaries and the balance in the bank account still has a positive margin. When there is financial management, the value is quickly identified and directed to something that can increase the company’s competitiveness, such as investments in equipment or even in financial applications. Without this attention, the entrepreneur stops making money or loses the opportunity to invest in the growth of the company. Learn also about how to Read Balance Sheet in accounting?

When the entrepreneur neglects accounting or financial management, he is putting the company’s future at risk. What can happen even when sales are going well.

After all, a high turnover is not enough for a company not to fail. Without control of the treasury, all the revenue can arrive after it is necessary for payment to suppliers and the State. In other words, the company is functioning well but has no liquidity to pay bills and is in default. A very risky situation, considering that, in this case, it is vulnerable to processes and damaging good relations with the best suppliers.

Software integration

Accounting often has a strong focus on past records and reporting, involving the creation and analysis of these documents. For a long time, this was done manually, in books and folders that occupied entire rooms. With the help of technology, new applications and platforms such as the financial tipster take care of this work and make life easier for the accountant.
Other resources make the financial tipster a source of integration between the work of the accountant and financial management. One of them is bank synchronization, which concentrates the information of all the bank accounts of the company in one place, with results that can be accessed at any time. Another is the issuance of invoices certified by the Tax Authority, with automatic VAT estimation. Thus, on the one hand, the accountant makes his work more agile and, on the other hand, the financial manager is able to have a global view of the company’s financial health. Read also Current Liabilities

Do I have to choose between financial management and accounting?

No. The accountant is an indispensable professional for the company to maintain control over its numbers, bank transactions and obligations with the Financial Authority. Treasury management is also essential, because it will analyze whether your current financial performance is favorable, in addition to showing how your company should leverage its finances to increase profits solidly. Therefore, the choice should be to work with the two areas in partnership. However, the entrepreneur is often attentive and concerned with these issues, but the structure of his company is small and there is no budget to hire specialized professionals. In this context, he needs to accumulate the role of financial manager with the responsibility of sending the financial information to an external accounting service. For this entrepreneur, using low-cost technology to control these processes is also a strategic attitude.

The solution offered by the financial tipster guarantees time savings and improved financial results, both for the entrepreneur who can count on an accountant and financial manager, as well as for those who need to manage everything on their own.

Accounting And Finance degree

The Accounting and Finance Degree course provides solid training in the areas of Accounting, Finance and Taxation, allowing access to a wide range of professional opportunities. The study plan, with a duration of 3 years, has a flexible structure that allows the student to orient his curriculum according to his interests and motivation and respond to some specialization needs required for the exercise of his function, through adaptations necessary and appropriate to the developments both in the area of Accounting and Finance and in the Company. The curricular structure of the course includes the Business Simulation unit that replaces the curricular internship. This curricular unit has the advantage of allowing the exemption of internship to candidates for Certified Accountants according to the protocol existing between ESCE / IPS the Order of Certified Accountants. The main educational objectives to be achieved through Business Simulation are as follows:

a) Consolidate and integrate the knowledge obtained in the other course units of the course, especially those that are most closely related to the exercise of the professions for which the course qualifies;

b) Provide the student with a practical view of these professions, integrated in the normal development of the course’s curricular plan, seeking to cover the basic needs that ensure an easier approach to the world of work and a better understanding of the professional problem;

c) Provide an ethical experience in the profession and business, developed in an environment of simulation of business reality.

Goals

The Accounting and Finance Degree course provides solid training in the areas of Accounting, Finance and Taxation, which will allow access to a wide range of professional opportunities. Its fundamental objectives are to respond to the needs of the business reality and the specificity of the region in which it operates. The Bachelor’s degree is primarily oriented to allow graduates to leave the active life, enabling professional practice in any organization.

Reasons for choosing the course

Because the profile of the course is adjusted to the demands of the job market; Due to the rigorous basic scientific training, completed with the development of a very strong practical component (the Business Simulation course unit allows students to perform the main tasks inherent to the exercise of the profession in a real work context);

Because the course is recognized by the Order of Certified Accountants as an appropriate academic qualification for the exercise of the profession (attending the Business Simulation course unit does not require the completion of a professional internship which constitutes one of the four conditions for enrollment in the Order of Certified Accountants);

For the technical, scientific and pedagogical quality of its teaching staff;
The close relationship between the faculty and students;

For the quality of the infrastructure that ESCE / IPS offers its students;
For the numerous extracurricular activities that ESCE / IPS makes available to its students throughout the year (business week, management games, seminars, conferences, workshops, etc.).

Employability

The employability rate in the Accounting and Finance Degree is 86.9%. (Data from the General Directorate of Higher Education, 2014).
The employability rate in the Degree in Accounting and Finance is quite high, with 82% of the graduates getting jobs within one year after completing the study cycle, with around 100% graduates getting jobs in sectors of activity related to the area of the study cycle (Data contained in the A3ES Agency Accreditation Report for the Degree in Accounting and Finance, 2012).

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