Accounting Closes the Books. Finance Opens the Possibilities.

Last week I was talking with another finance professional about how often people confuse accounting with finance.  We both knew better – they may share data, but they serve very different purposes.

My friend brought up the analogy of driving a car.  Accountants use the rearview mirror, and Finance focuses on the GPS.

“You can’t drive a car by staring in the rearview mirror. And you can’t grow a business by only looking at last month’s numbers.”

Accounting is essential. It tells you where you’ve been, how fast you were going, how much gas you used, and whether you obeyed the rules of the road. It’s precise, consistent, and governed by standards that keep your business in compliance. Think of it as the rearview mirror and dashboard — crystal clear, real-time, and full of information about what just happened.

But finance? Finance is the GPS. It asks, Where are we trying to go? It maps out the most efficient route, reroutes you when obstacles pop up, and helps you see around corners. Finance takes what accounting captures and uses it to make decisions, guide investments, and model out multiple scenarios.

I remember as a young analyst trying to explain to the Controller of GMAC that we needed more granular accounting information so we could calculate product level profitability.  She was insistent as long as we knew the bottom line for the organization, that was all that was necessary.  She didn’t appreciate it when I replied, “Not if we want to increase the bottom line.” That conversation has stuck with me because it perfectly captured how even inside finance teams, our perspectives can diverge.

Her concern and primary focus was on filing the 10-K, mine was on increasing the profitability going forward.  Without her information, I would be flying blind, but without my forward focus she would have been stalled on the side of the road.

It’s not either/or. It’s both.

You need to know where you’ve been and how you got to where you are — no question. But knowing only that isn’t enough.

• A clean close doesn’t tell you if you can afford to hire next quarter.
• A balanced ledger won’t reveal if a price increase will hurt or help.
• A perfect P&L won’t help you decide whether to expand into a new market.

That’s where finance steps in. It’s the strategic layer that turns numbers into insight, and insight into action. Finance opens up the “what ifs.” It brings clarity to complexity and gives leadership the confidence to move forward.

So, what does this look like in real life?

• Accounting says: “We spent $250,000 on marketing last year.”
• Finance asks: “What did we get for that spend — and should we spend more, less, or shift channels?”
• Accounting shows: “Revenue is up 10% year over year.”
• Finance digs deeper: “How much of that growth is sustainable, and what’s driving it?”
• Accounting reports: “Cash on hand is $1.2M.”
• Finance models: “Can we survive a 10% dip in revenue for the next six months without cutting staff?”

The real magic happens when accounting and finance work together.

When the books are clean, timely, and accurate — and that data is being actively analyzed, interpreted, and used for decision-making — your business becomes a well-oiled machine. You’re not just reacting. You’re steering. Strategically.

So yes, close the books. Do it well, and do it often.

But then open up the possibilities.