What is the Difference Between Financial Management and Book Keeping?
If you are one among those who relates finical management to book keeping then you need to re-think. In fact, there are many people who consider financial management similar to book keeping or often gets confused to differentiate between both of them. Perhaps, the difference between book keeping and financial management is a common inquiry among numerous sophomores who are eager to gain knowledge and have a career in the sphere of financial and business management. From an elementary perspective, the aspect of financial management is a massive arena, and much broader than that of conventional book keeping methodologies. It is true that most of the financial management programs incorporate the study and application of book keeping in their syllabi, but as a whole, the ins and outs, details of financial planning and management are monumental in quantity and relevance.
Generally, the book keeping procedure deals with the traditional methods of accountancy that primarily considers the debiting and crediting of various monetary transactions. On other hand, the different facets of financial management do not only deal with accountancy, but it even includes other core subjects such as economics, mathematics and commerce.
The procedure of bookkeeping is largely mechanical and often do not require any detail study. Instead of the analyzing, the bookkeeping majorly depends on the recording of the information. On other hand, FM once again also address to risk associated to business. Every business that has a well defined system or even a good cash flow can have a problem. Now through some tried and true methods of proper financial management problems like handling any sort of cash shortages can be prevented. The principles of management can at times help in preventing cash flow problems and deal with them more effectively.
Moreover, F.M as a whole can be broadly defined as the procedure of running the financial resources, including financial reporting, budgeting, risk management, and insurance for a business. In fact, it primarily refers on two key aspects – how you are really financing your business and how well you handle the money in the business. However, bookkeeping basically talks about the day to day operation of an accounting system. It majorly refers the recording of regular transactions within the suitable accounts. An accounting system defines the process of recognizing, evaluating, recording and talking about the financial information concerning the business. So, in simple words, the bookkeeping can also be considered as a subset of the accounting system.
Without doubt, financial management generally encompasses a number of crucial areas of business, but at same the business results are usually delivered in forms of reports. Consequently, talking in the present context both financial management and book keeping have their own role to play, but having a knowledge of both can always assure excellent employment in the market. Both of them are beneficial in terms of salary and also at context of job satisfaction.