Numbers People
June 18, 2009, 7:42 pm
Copyright © 2009 Integrated Profitability TM
Several blogs ago, I made a light-hearted distinction between accountants and finance managers (Finance is zzzzz….). We received a request for more differentiation between the two professions. In my mind, there is a big difference between the two; but I might be like the Eskimo who has many words for snow, each one dependent upon the physical characteristics of the white, cold stuff covering the ground. Above the Artic Circle, some types of snow are your friends while others might kill you.
Let me hasten to clarify: different “numbers people” won’t kill you. But the right ones might keep you out of bankruptcy court or jail. The best ones might help launch you in the opposite direction and really benefit your company.
While I was thinking about the request, it dawned on me that the World of Numbers is inhabited by a number of strange creatures (what? I can’t slip some word play? Contrary to popular belief, numbers people have been known to engage in humor: it’s just different. Takes getting used to. Like wasabi).
I hope it’s clear, but here’s the disclaimer: what I am about to write is my personal view of the various types of people and jobs associated with financial numbers. Others will no doubt have different views but that is the beauty of a diverse and dynamic world.
In the arena of financial statements, there are three main job functions: accountants, bookkeepers and financial managers. These three work together to create and report on a company’s financial position.
● Accountants figure out how to book the transactions that are the life of the company. They also review and certify that numbers have been booked accurately. Accountants own the legally mandated infrastructure of the financial statements. They are responsible for ensuring that the numbers fairly and transparently report the financial condition of the company.
● Bookkeepers post numbers into the company’s financial system (a.k.a. general ledger). Bookkeepers own the populating of the financial statements. They are responsible for ensuring that all the numbers relating to transactions are put into the financial databases.
● Finance managers report and explain the historical (a.k.a. actuals) financial statements, as well as forecast, model and plan what might happen in the future. Finance managers own the interpretation of the numbers and the business explanations regarding the movement of the figures. They are responsible for translating the movement in the numbers into recognizable business events and to forecast what is most likely to happen, to the business, in the future.
In practice, these three functions can easily overlap. However, if at all possible, it is best to separate the roles. An effective division of responsibility is wise, especially between accountants and finance managers.
More on that later…
Bill
William A. Stong
Email: william.a.stong@gmail.com
SBF&P # 22
Copyright © 2009 Integrated Profitability TM
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