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Two very basic questions

I have two very basic questions. Please advise.

1. I have seen a couple of people who work as a “Principal” in financial organizations. What does this designation mean?

2. What is the difference between “finance” and “accounting”.

Answers

Topic Expert
Wayne Spivak
Title: President & CFO
Company: SBAConsulting.com
LinkedIn Profile
(President & CFO, SBAConsulting.com) |

Two excellent questions both with many answers.

It depends. On industry, size, personal preference.

One possible answer for finance/accounting is management vs recording. Arguments can be made whether analyzing is an accounting or finance activity.

Principal could be owner, lead or a title given to a minor owner.

Again, open for discussion and alternative viewpoints

Chris Shumate
Title: Accounting Manager
Company: Dominion Development Group, LLC
LinkedIn Profile
(Accounting Manager, Dominion Development Group, LLC) |

My experience, which isn't as much as others on this site, is that Accounting is responsible for the recording of what's occurred, as Wayne comments. Accounting is also responsible for the presentation of the financial statements thus focusing on what's already happened. Whereas finance is more forward looking. Finance will look backwards to historical data in order to report what it thinks is going to happen in the future. Finance will set up deals and look for deals for the company to get involved in.

If the company is small enough the same person who's responsible for accounting will have traditional finance work to do also. There may not be a clear delineation between the two career paths.

Len Green
Title: Performance Improvement Consultant and E..
Company: Haygarth Consulting LLC
LinkedIn Profile
(Performance Improvement Consultant and ERP Strategist, Haygarth Consulting LLC) |

Anon
I wrote this blog a while back
https://www.proformative.com/blogs/len-green/2013/09/24/cfo-protection-or-productivity-role

I would expand the definition of Accounting into
-Financial Accounting: basically the role of the Controller-reporting on the past, public reporting,
-Management Accounting: in the USA often called FP&A; forecasting and analysis of the financial aspects of the business (helping business colleagues with costing, pricing, business cases/modeling, budgeting, management reporting)

Then Finance deals with: capital structures and company financing, M&A deals, treasury, etc.

Hope this helps

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