Why businesses should have both accounting and finance team?

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.



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



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.



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.



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.



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. 



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.

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. 



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.



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.



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.



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.



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.



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.



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.



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.