Relationship between Accounting and Finance in health care organization

Relationship between Accounting and Finance in health care organization

Finance and accounting are the important part which helps in evaluating the financial aspect of the organization. Accounting is the field in which the company maintains different financial and business transactions that has incurred. It helps in maintaining the record of all the revenues and expenses of the company and helps in analysing the profitability of the company. “Accounting is concerned with financial record keeping, the production of periodic reports, statements and analyses, and the dissemination of information to managers and, to some extent, investors and the world outside the business. It is also much involved with the quality, relevance, and timeliness of its information output. Alternatively, the role of the financial manager is not to provide financial information but to make decisions involving finance” (Jana Kajanová 2006). There are different fields of accounting like financial accounting, tax accounting and managerial accounting. Financial accounting is majorly for the reporting of all the transactions that the company has incurred and organization,

Financial accounting has legally prescribed content and form which needs to be followed by the organization as it helps in the verification of the accounts of the company by the auditor. Financial accounting helps the stakeholders to provide the information which is trustworthy.

Managerial accounting is usually for internal purpose which helps in planning and making different decisions which helps the company to achieve its set goals and target.

Accounting deals mainly with preparing and examining financial records and ensuring their accuracy, making sure taxes are paid on time and properly, and assessing financial operations to help ensure that organizations run efficiently.

Finance on the other hand helps in developing different strategies which helps in achieving the long-term financial goals of an organization. The organization uses different techniques which helps in evaluating the viability of investment in future projects.

Accountants and financial managers together must operate effectively and efficiently to ensure the continued short-term and long-term financial viability of any health care organization.

To be successful and compete in the competitive environment, it is important for the health care organization to understand and comply to the financial and accounting aspect of the company as it helps in analysing the profitability as well as viability of the company. For a health care organization, profit might not be the end need, they have a strong emphasis on the well being of the company and finance and accounting are the support pillars for this.

Finance and accounting department helps in successful management of the resources and finances of the company and helps the company to acquire funds which helps the company to adopt new technologies which helps in delivering different treatments and well being of the patients. Finance and accounting helps in analysing the viability of the company which is usually done with the help of different financial techniques. The viability of the company can be analysed with the help of different financial ratios like liquidity, solvency, profitability and efficiency.

Different financial statements like income statement, balance sheet and cash flow of the company helps in analysing the financial position of the company.

Thus, it can be said that finance and accounting are important aspect of the company which helps the company to know its position and helps in taking different actions.

Reference:

Jana Kajanová 2006, the relationship between business finance and accounting, from: http://www.researchgate.net/publication/237813222_THE_RELATIONSHIP_BETWEEN_BUSINESS_FINANCE_AND_ACCOUNTING