Why businesses should have both accounting and finance team?

While most people use the two terms synonymously, finance and accounting are actually separate roles with different responsibilities.


A finance team deals with analyzing the financial records and figuring out ways to improve efficiency, the accounting department is responsible for the accurate creation of all financial statements of a business.


Both these departments are interdependent to successfully carry out their tasks. 

 

Companies can have both these departments as in-house teams or they can outsource this job to external finance and accounting firms.


Below you will find out more differences between these two roles, how finance teams help accounting, and how using software like Volopay can make life easier for both departments at your company.

What is the difference between accounting and finance?

There are many differences between an accounting and finance department in terms of the approach they take towards the financial statements of a company, their thought process, and the purpose they serve for a business:

Who they work for

Accounting professionals, as well as finance professionals, are needed by pretty much all types of entities who deal with money including individuals, businesses, and governments.

Employment opportunities

While professionals specializing in finance are majorly employed by banks and corporations, accounting professionals are recruited by public accounting firms and other corporations.

Financial records

When it comes to financial statements like balance sheets, cash flow statements, etc. people in accounting are responsible for its creation whereas the finance department plays the role of analyzing these statements.

Point of view

Since accounting operations involve looking at past finance transactions and recording them, this profession is backward-looking in nature.


On the other hand, finance employees have a tough job predicting the future by looking at past data.

Responsibility

The job of the accounting department is to accurately and reliably ensure the organization of all accounts.


The role of a finance professional is to analyze and bring forth fruitful insights.

Business purpose

With the preparation of all financial statements, accountants aim to convey the financial position of the organization.


A finance professional analyzes the company's monetary position and aims to add value by figuring out ways to use capital more effectively. 

Detail

Both finance and accounting require very high attention to detail when fulfilling their roles as matters related to money can be a big differentiator for businesses making a profit or a loss.

What does your accounting team need from your finance team?

Accounts payable and accounts receivable

The finance team is responsible for maintaining the accounts payable and accounts receivables of a company.


AP is a part of the finance team that deals with payments to vendors, suppliers, etc. AR deals with tracking money that is coming into the company.


It is also responsible for sending invoices and payment reminders to clients or customers.


The finance team of most companies uses a computer system to deal with and keep track of all AP and AR accounts.

 

The accounting department needs the finance team to accurately provide all the AP and AR transactions of a particular period so that they can create correct balance sheets

Payroll

The payroll department within a finance team is responsible to ensure that all employees are receiving their salaries on time along with their payslips, pension contributions, etc.


Once successfully carried out they must provide this information to the accounting team for balancing the books.

Tax & compliance

The finance and the accounting team must also ensure that other teams are complying with expense policies and the company is paying the right amount of taxes according to their income.

Budgeting

Every month, quarter, or year the finance team has to sit down with all the major stakeholders of a company and plan out the budget requirements for each team.


This is done through various forecasting methods. After the particular period has passed, before planning further budgets, the finance team should report how much budget was used by each team from the allocated amount.


This data of course is necessary for accountants to record in financial statements but is also useful for better budgeting in the future.

Financial controls

The finance team should also enforce certain financial controls, especially when it comes to carrying out expenses.


This is generally taken care of by a financial controller who uses a software system to ensure that all transactions are according to the company policies.

Advantages of having both accounting and finance teams in your company

1. Cost savings

Outsourcing your accounting and finance department's work to external firms might be a good option only if you are running an extremely big company where you don’t have the time to hire specialized teams.


For small to medium-sized companies, finance and accounting firms can turn out to be very costly.

2. More flexibility

Running accounting operations in-house will give you more flexibility in terms of being able to see a clear picture of all your finances.


When you outsource this work to an external agency, you do not get the same level of depth and insight you would while having an accountant in your team and constantly being able to keep in touch with them for updates.

3. Save time

When working with public accounting firms or professionals, a lot of time is wasted in collaborating and exchanging data and ensuring that all the necessary information is going to the firm.


When you have a team in-house, there is complete transparency and communication takes place quickly.

4. More efficiency

An in-house accounting and finance team helps processes to be executed faster as the flow of information and communication happens pretty much instantaneously.


Since they work just for you, meetings and collaboration happen fairly quickly leading to better outputs.

How can Volopay help you in managing accounting and finance?

Volopay is an expense management software with intuitive accounting automation that makes life easy for your finance and accounting team.


Our platform is a robust ecosystem of financial tools like corporate cards, domestic and international money transfer, vendor management, instant reimbursements, and more that helps your finance team to manage all company expenses through one system.

 

A part of this software that your finance team will love is the ability to set custom spending limits on each card payment and money transfer along with approval systems that enforce expense policy compliance.


Plus, since all the tools are connected to the software dashboard, all transactions are tracked in real-time. 

 

For your accounting team, we provide easy integrations with some of the most widely used accounting software like Xero, QuickBooks, Deskera, FreshBooks, Netsuite, and more.


Through this, expenses are automatically synced between both systems so that the accounting and finance departments are on the same page at all times.

Make the accounting & finance team's life easier with spend management