Accounting and Finance: A Side-by-Side Comparison

Accounting and finance are terms that are often used interchangeably. And while these two are closely related as they are related to administration and management of assets, they can differ in scope, focus, and career opportunities. Whether you’re considering career opportunities in either field or just want to learn more about each role in business, we’ll provide a side-by-side comparison of accounting and finance, highlighting their key distinctions and similarities.

What Sets Them Apart?

The main distinction between finance and accounting is that accounting deals with tracking the daily financial transactions of a company. In contrast, finance focuses on future growth planning and the broader management of assets and liabilities.

Finance might be your area if you're inclined toward overseeing a company’s strategic direction. But if you're interested in scrutinizing financial records, accounting is likely a better fit.

Accounting typically reflects on past financial activities, whereas finance is forward-focused, aiming to plan for future asset acquisition.

Accounting emphasizes accurate reporting of past events and adherence to regulations, while finance concentrates on future growth and risk management. If you prefer long-term planning, finance may suit you more than accounting.

On the other hand, Finance focuses on money management, investments, and identifying financial risks. It pertains to how individuals, businesses, and organizations raise, allocate, and use financial resources over time. Finance professionals analyze financial data to make investment decisions, manage assets, and optimize capital structure.

Key Areas of Focus

Accounting focuses on the accurate and timely recording of financial transactions. The typical activities involved in accounting are recording transactions, collecting information, compiling reports, and summarizing performance. The results often include comprehensive financial statements—such as the balance sheet, income statement, and cash flow statement—and ensuring they are prepared in accordance with generally accepted accounting principles (GAAP) or international financial reporting standards (IFRS). Accounting can be segmented into Managerial or Financial Accounting. Very few jobs always require 100% accuracy, and accounting is definitely one of them.

Finance focuses on the strategic management of resources to maximize value. This includes making decisions about investments, capital budgeting, and managing the financial performance of organizations. Finance professionals use financial data to predict future performance and guide decision-making. In finance, strategy and business partnership is expected. When the business is not performing well, finance needs to analyze and explain every headwind. When assessing performance in finance, cash remains to be king.

Key Activities

Where Do They Overlap?

Despite their differences, accounting and finance often overlap. For example, financial analysts may use accounting data to assess the financial health of a company, while accountants may need to understand finance principles when preparing budgets or forecasts.

Both fields are integral to the overall financial management of organizations and frequently collaborate to ensure a company's financial stability and growth.

Tying It Together

Accounting and finance are critical to any business's success, but they serve different purposes and require distinct skill sets. Accounting is primarily concerned with tracking and reporting financial information, ensuring accuracy and compliance. In contrast, finance focuses on the strategic management of resources, making decisions that will drive future growth and profitability. Both these areas require automation tools to help with the load and accuracy of output.

Epicor Financial Planning and Analysis (Epicor FP&A) is a unified and easy-to-use software for financial reporting & analysis, consolidation, dashboarding, budgeting, and planning. Designed as an add-on to your ERP system, this solution is a tool that automates processes to make generating financial statements and reports quick and easy. It is also a tool that helps with the strategic focus of the business through budgeting, forecasting, financial modeling, and consolidation.

Keen to learn more? Take a quick product tour of Epicor FP&A now.