What Is the Relationship between Corporate Finance and Accounting?

Geri Terzo

The roles of corporate finance and accounting at an organization have some similarities, such as both being tied to economics, but there are also differences. Accounting professionals often prepare the financial statements and documents that are based on the activity performed in corporate finance. Individuals in accounting functions are often behind the scenes and may perform job functions in a private manner, while corporate finance individuals may be hired by a company to be out in front raising money, providing valuations on assets and businesses, and performing transactions. Corporate finance and accounting professionals may also be part of the same organization.

Finance deals with funding a corporation's operations; accounting deals with recording and reporting financial data.
Finance deals with funding a corporation's operations; accounting deals with recording and reporting financial data.

It's quite possible that the corporate finance activity at an organization is in response to financial information provided by an accounting division. Interestingly, the accounting function similarly relies on the results and endeavors of corporate finance. The role of corporate finance, however, can extend beyond a company's accounting results and into the market and economic conditions surrounding that organization. Subsequently, corporate finance and accounting do have a relationship, but often, each performs tasks that are separate from one another.

A company's future growth could be highly dependent on the performance of corporate finance activity. It is common for a business to introduce a third-party firm, such as an investment bank, to perform corporate financing on behalf that organization. These financial professionals allow businesses to raise money and perform other activities in the stock and bond markets. As a result of corporate finance, a business may be able to sell enough equity or debt in the markets to begin a major project, expansion, or launch a new product. The results of these endeavors become the financial content that accountants may use to compile financial documents.

In accounting, professionals produce financial snapshots on past and current performance. Typically, accounting professionals will strategically follow the daily financial activity at a business. Accountants are involved with many financial details, including payroll, and professionals in these jobs typically exhibit a high degree of organization in addition to an ability to focus and pay attention to small details.

Corporate finance and accounting may be functions performed on an internal basis at an organization as well. Both finance departments might collaborate to assess the risks that a balance sheet might be exposed to and determine solutions for those vulnerabilities. Professionals in both roles might determine if cash and access to capital are sufficient based on the potential of a business and other economic conditions. For publicly traded companies, corporate finance and accounting employees are involved with determining whether capital-raising efforts and spending patterns are adequately benefiting shareholders.

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