The Difference Between Finance and Accounting


Every small business has an accounting function. It’s the way you pay your bills and invoices your clients, and your accounting books will tell you how your business is doing. Often, the words “finance” and “accounting” get used interchangeably, but this isn’t quite accurate. While both finance and accounting are umbrella terms that focus on the financial health of a business, the difference is in the timeframe. 

While accounting tells you how the business has done in the past and how it’s faring in the present, finance tends to focus on the future and includes budgets, financial projections, strategic goals, and opportunities. 


Accounting is the process of accurately recording financial transactions related to business operations. The accounting process includes summarizing, analyzing, and reporting all transactions both for internal use and to make reports to oversight agencies, regulators, and tax collectors. Accounting creates financial statements meant to be a concise summary of transactions over an accounting period, and the goal is to summarize a business’s cash flow, operations, and financial position.


Finance, on the other hand, can be defined as the management of a business’ money and includes activities such as investing, borrowing, lending, budgeting, saving, and forecasting. The goal of these activities is to look at a company’s money through the perspective of strategy and growth, identify opportunities or potential problem areas in advance, and take steps to align the business with future demand. 

Many small to medium-sized businesses will have accounting resources in place long before they engage in finance. While the accounting department may have a good handle on the day-to-day operations of the business, they may not have the time or expertise to engage in financial activities that will serve the future needs of the business. While it may be worthwhile to help the accounting team (or individuals, in very small businesses) learn the skills and mindset they need to become effective in financial management, this takes time and resources. One way to put the company’s future on the front burner is to engage a professional financial services advisor. 

The Benefits of Engaging a Financial Consultant

Financial Consultants have the experience and expertise necessary to help a small business make the most of its capital. They can assist in assessing the viability of the company’s business model and outline strategies and timelines for the organization’s best path toward growth and profitability. Financial advisors are trained and experienced to ask the right questions and find the answers that will help your business grow and take advantage of opportunities. It’s their job to offer timely insights into your company’s risk exposure, ways to economize, and smart approaches to debt and investment opportunities.

DOAAR is a small business financial services firm that can help your small business attain its long-term goals. Specializing in bookkeeping, controller, and CFO services, DOAAR’s offering spans daily accounting, month-end close, complex financial modeling, and oversight. From execution to analysis and strategy, DOAAR provides clients with a powerful and fully integrated back-office accounting solution. We have locations throughout California and the rest of the U.S. Visit our website for more information or to contact us.