To better understand what basic finance is about in relation to accounting, we can summarize some important differences:
Accounting :
- Historical - Looks Back Predictive
- Oversight and "Cop Like"
- Narrow Focus
- Financial Only
- Short Term Focus
- Advocates Profits
- Control Cost by Accounts Control
- Rules and Compliance
Finance :
- Looks Ahead
- Service Oriented
- Broader Focus
- Financial and Non-Financial
- Long Term Focus
- Advocates Value
- Cost by Process
- Free From Rules
In order to have a solid level of finance in place, you may need to consider:
1. Financial Performance Evaluation: A set of standard procedures to monitor the financial performance of your organization, including economic based measurements.
2. Capital Budgeting: A process for evaluating how to invest in long-term assets or projects.
3. Cash Flow Management: Forecasting procedures to better manage your cash inflows and outflows.
4. Working Capital Management: A set of guidelines to direct the financing of your assets.
5. Risk Management: Identifying risks, measuring the financial impact on your business, and implementing procedures to reduce significant risks.
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