Finance and accounting are two disciplines that are closely intertwined. Typically, those in finance work on planning and directing the daily financial transactions for an organization. Accountants record and report on those transactions. In short, accountants are more reactive than financiers, whereas financers are more proactive than accountants.
What is Finance?
Definition: Finance deals with making money work for you—or against you—as an individual, an organization, a corporation, or government. Finance professionals may use economic and statistical information, cost-benefit analyses, interest rate projections, measurement devices, tax preparation and interpretation, financial reporting, and audit. In addition, they are responsible for maintaining records that provide information regarding financial reporting activities for companies or organizations. There are three subcategories under finance they are:
- Personal finance includes financial planning for individuals and families. This may be in the form of long-term financial management, such as retirement savings or purchasing of financial products, such as mortgages or banking.
- Corporate finance encompasses all financial activities in an organization, including investment strategy, budgeting, and cash management.
- Public finance is a domain of economics and finance concerned with government revenue, expenditure, and borrowing.
Careers in Finance
Finance is an expansive field. It encompasses tax counseling, investment banking, and financial analysis. There are many careers in finance available to both beginners and experienced professionals.
Careers in finance include roles such as investment bankers, financial planners, financial analysts, financial managers, and others.
Finance Required Skills
To succeed in finance, you must possess both hard skills and soft skills, which come from a blend of academic disciplines and years of practical experience. Soft skills are as critical for success as technical knowledge, so you must learn these important interpersonal, communication, and problem-solving skills early on in your career.
What is Accounting?
Definition: Accounting provides a framework or system for allocating resources and recording expenses. It is concerned with legal issues such as taxes, financial transactions, cash management, and balance sheets. Accounting is a big field and can contain different types of employees such as budget analysts, project managers, or financial analysts. There are 3 subcategories of accounting:
- Financial accounting generates financial statements that highlight a company’s performance before the investment of other Types.
- Managerial accounting focuses on the business decision-making and expenditure analysis of managers and executives in the organization. This can include analysis, general ledger tracking, budgeting, etc.
- Cost accounting helps to determine the cost of producing a product and whether its production is viable. If not, it helps in deciding what the product should cost.
Careers in Accounting
Accountants at a company are responsible for ensuring that all financial transactions are recorded accurately, managing the general ledger and payroll. Additionally, accounting professionals track tax obligations and manage cash flow.
Careers in accounting include bookkeeping, auditing, tax accounting, business budgets, financial reporting accountant, auditor, technical accounting manager, and interpreting financial and legal issues.
Required Skills for Accounting
To excel in business, accounting professionals should have a combination of skills in their field, knowledge of other business practices, and the ability to interact effectively with all levels of an organization.
Accounting requires hard skills, such as expertise in technology and software systems, including Excel, ERP experience, SQL, and business intelligence software. Accountants also need excellent communication and problem-solving skills.
Accounting vs. Finance: Salaries
The fields of accounting and finance both have high salaries. Accounting careers are also expected to increase in growth.
According to the Bureau of Labor Statistics, the median pay for a Financial Analyst in April 2014 was $78,620 per year, $37.80 per hour. Over the next 10 years, job opportunities for Financial Analysts are expected to grow by 12 percent.
The annual salary for an accountant has an average of $65,940. The jobs are expected to increase by 11% between 2014 and 2024.
Salaries in finance vary widely across different roles depending on experience and seniority. According to the Bureau of Labor Statistics, fundraisers tend to have lower salaries than other finance roles averaging $52,430 per year or $25.21 per hour.
Finance vs. Accounting Decision
The Finance vs. Accounting decision can be a complicated one – both fields are extremely lucrative, and the paths you can take within them are numerous. Overall, all professions in these fields are similar in that they both require lots of hard work and the ability to interact with numbers daily successfully. In contrast, they are different because while Accountants tend to work for corporations, Finance professionals tend to work for consultancies or hedge funds.
If you’re currently deciding between a career in accounting or finance, consider each of your options carefully. Though both careers may appeal to you, each job will allow you to use different abilities and skills. Ultimately, the best career decision is the one that fits who you are.