Finance: What managers need to know?
Interview with: Joe Knight, Co-Author of Intelligence Finance.
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What is the Difference between Finance and Accounting?
Accounting is gathering historical information and numbers. Finance is using historical number to make decisions. It is a problem when general managers leave numbers to the numbers people. General Managers should share numbers with finance and Accounting specialists to encourage and motivate them. Moreover, Finance means the study of different ways in which individuals, businesses and organizations raise and allocate monetary resources and use the same for business purposes keeping the risks involved in mind.
The activity of finance is the application of a set of techniques that individuals and organizations use to manage their financial affairs, particularly the differences between income and expenditure and the risks of their investments. There are different categories in which finance could be distributed, like personal finance, public finance and corporate finance.
Accounting on the other hand is the measurement, disclosure or provision of assurance about financial information that helps managers, investors, tax authorities and other decision makers make resource al decisions. Financial accounting is one branch of accounting and historically has involved processes by which financial information about a business is recorded, classified, summarized, interpreted, and communicated. There are different categories in which accounting can be distributed, like cost accounting, financial accounting, internal and external accounting, etc.
Does not it make a conflict with specialization?
No, because business is like the game, if you dont know how to play the game you will lose.
What is the difference between cash flow and profit?
They are different; you may make a sale then a profit, but cash until 60 to 90 days. Thats why cash flow becomes very important.
Transparency
Transparency was not in the business world; however, it is becoming more and more important these days.
© ABDULRAHMAN NASEEB |Dr. SAMMER HAMMAD| KNG FAHAD UNIVERSITY OF PETROLUOM AND MINERALS
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