How Finance is different from Accounting in Business?

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How many of you believe that finance and accounting are the same? Perhaps many of you think that they are similar, but in reality, they are not. Both have a different meaning, different nature and other uses. Those who are from either the accounting or finance field can understand this.

You should know the difference

The common people should understand it in a better manner because financial illiteracy is still among the most significant issues in their financial lives. Many people still do not know what things affect their credit score and where they can check their credit report. In such conditions, how is it possible to understand the detailed difference between finance and accounting? 

However, before you know the difference, know about one similarity. Finance and Accounting can be used for a business as well as an individual. If they can deal with the annual turnover concerns for a business, they can also tell a jobless about the profitability of taking guaranteed loans for unemployed. Isn’t that versatile?

Finance Accounting
MEANING Finance is a bigger term that relates to the management of assets and liabilities.  MEANING Accounting is the management of day-to-day flow of money.
ROLE Finance gives you control over the strategy of a company or business.  A person who controls the finance of a company always knows what is going on in the accounting department. ROLE   Accounting is essential if you want to know about the small details of income and expenses. The accounting department may not know what is going on in the bigger picture that is finance.

Which affects the other? Finance or Accounting

Finance affects the account more. As finance is the bigger term, it can also change the accounting policies of a company. A change in the financial strategy can affect the accounting ways of a company because it is a smaller unit. But the latter cannot make a company change its money-related decisions. However, in any case, you should not think that this fact makes accounting less critical. The only thing is that accounting is smaller in size, but we all know where you need a needle, a sword cannot be used.

Finance Accounting
IMPACT ON DECISION MAKING Finance has a more dominating role in the decision making of the business owners. It can make a business change its historical methods of money management. Small or big, a change in the money management ways affects the whole picture.   IMPACT ON DECISION MAKING Accounting exists as the department of a big company. It can never become a reason behind a large scale change in a business entity.  However, every time a new decision occurs, the figures that accounting records, change.
EFFECT OF NATIONAL ECONOMY Of course, finance can never stay unaffected from the national economy. Any slightest change in the business or tax strategy by the government can make a businessperson worry about its financial conditions.   EFFECTS OF NATIONAL ECONOMY Accounting is never under the direct effect of the national economy. It keeps working on its normal pace and seldom faces any challenges. Just imagine why you will change the accounting software only because the government has applied new tax on export? But that can positively affect the financial management method of your business.

Finance and Profit Have a Direct Connection, but Accounting has Less to do With Profit

Most of the businesses work hard on their financial strategy to meet their profit goals. They try varied strategies that can suit to the products and services that a business offers. Following are the reasons why finance directly relates to profit and not accounting.

  1. Financial predictions are necessary to ensure that the company can reach its profit goals at the right time. Analysis and research take place to make the best way to work for sales targets.

Accounting methods are not big enough to make a direct connection with the business or company profit. It can only be used to calculate the increase and decrease in sales but both really never meet face-to-face.

  • Finance and sales are interconnected. They both keep changing for each other. Sometimes, financial strategy changes for the sales department needs. Sometimes sales follow the finance policy.

Accounting has no interconnection with sales. It does not demonstrate the latter actually but has a vital role because finally, the sales figures need to be recorded by accounting.

  • Finance has a big significance for sale because they both sit together on the table in every business meeting. One affects the other; every small and big decision is taken mutually.

Accounting is not as strong as finance for sales, but also it is not insignificant. It is due to the day-to-day small accounting details that tell if the daily sales target are going in the right direction.


The above differences tell how finance and accounting are like two different coins. However, at the same time, sometimes they also act as the two sides of a coin. For example – in sales, both finance and account are necessary. If finance makes the sales strong, the accounting tells if the growth is going in the right direction or not. The final message is both are important due to their individuality, and both should exist because one cannot compensate the other.

Emma Parker is a Digital Marketer and Passionate Blogger. I have Written blog on Various topic like Finace, SEO, travel Etc

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