Question

How do accountants and financial managers differ in their use of financial information? Why is cash flow more significant to a financial manager than it is to an accountant?

Answer 1

Accountants are mostly concerned with recording the financial information etc . They maintain the day to day activities of business. Generally they help to prepare the records that are useful to financial managers. Financial managers have a bird eye view of an entity where as accountants have information that is restricted to their respective division that may be a payroll division, invoice booking, production costs etc. Accountants are also concerned with payment of taxes and maintaining tax records. On the other hand a finance manager rely on the reports prepared by accountants regarding tax records.

Cash flows analysis help the finance manager to make the cash budgets. When ever the finance manager need to make cash flow analysis he will contact with the accountants that are concerned with the treasury, supplier, customer and payroll departments. In this way he can analyse the net cash required and cash position of the entity.He will then allocate the available resources as per the priority.

Simply speaking finance managers were the people who develop the overall strategy relating to entity and they are concerned with managing the funds and improving the shareholders wealth where as accountants will function as per the directions and supervision of the finance managers.