Bookkeeping, accounting, controlling, it’s all just crunching numbers, right? Not exactly. While both roles are fundamental in an organization’s accounting process, each position executes tasks at different tactical and strategic levels of this process. Understanding the similarities and differences between the two will help guide your decision making when deciding exactly which position is best for your organization.
How They are Similar
Both professions deal with (a lot of) numbers and require scrupulous attention to detail. This is true at every stage of the accounting cycle. From the moment a transaction occurs to when the books close, accurately gathering and processing financial information is at the heart of both bookkeeping and accounting.
Organizational Scope and Responsibility
Depending on the size and scope of the organization, finance professionals must remain flexible in adjusting to differing expectations of responsibility. As they advance through their careers, accountants will have opportunities to hold a variety of positions and, in many cases, they will be called upon to perform tasks outside of what an accountant might normally do. This is especially true in smaller organizations, where employees often diversify beyond their traditional roles to maintain company growth and productivity.
Increasingly, bookkeepers are experiencing similar trends in role expansion. Many bookkeepers now take charge of tasks like data summary and financial report classification. To facilitate this, companies implement specialized software which automate lower-level tasks, freeing the bookkeeper to fulfill more strategic duties. Bookkeepers who take on the additional responsibility are often referred to as full-charge bookkeepers. In some cases, they may command a higher salary than an entry-level position.
The Finance Stack of Top Performing Startups
How They are Different
A bookkeeper is generally regarded as an entry-level position, handling tasks that include recording financial transactions like invoicing, debits and credits, payroll, and general ledger maintenance. These duties fall into the earlier stages of the accounting cycle, as bookkeeping is primarily concerned with the procurement, entry, and (sometimes) organization of data.
Fortunately, data entry processes have come a long way in terms of simplicity.
Accountants handle many tasks, and advance to a variety of levels based on their experience and qualifications. At its core, the accounting field has become increasingly abstract; less based on what the numbers are and instead what they are saying.
Specifically, accountants are charged with interpreting and analyzing the data (often collected by bookkeepers), and then turning it into knowledge or actionable insights. This may contradict what many believe regarding what an accountant does, as accountants usually make themselves most visible around tax time. Aside from serving as the go to tax authority, accountants have begun to take leading roles in business processes like operational cost analysis, cash flow improvement, and advising management on making better-informed business decisions.
Almost universally, companies mandate some form of accredited degree and related work experience for either job. For bookkeepers, this typically means 1-3 years’ job experience and an associate degree, although this does not account for additional specialized certifications.
Accountants are a bit more open-ended, as they can work in an array of different capacities depending on the organization. Generally, a qualified accountant will possess a bachelor’s degree in accounting, or at least finance, and may be a Certified Public Accountant (CPA). Some accountants with the right education and experience opt to take the Uniform Public Accountant exam to obtain this certification.
A few of the major accounting professions include:
- Public Accountant
- Management Accountant
- Government Accountant
Advancement to different positions can vary greatly and not all promotions require a CPA. While some certifications may look fancy, ensure that the experience matches the need.
The Role of Technology
Automation software in artificial intelligence and robotics processing automation (RPA) have shifted the expectations of finance professionals. For example, generating finance reports was once a staple in the accountant’s arsenal. Today however, there are commercially available software tools that can easily accomplish this, which in some cases has passed the buck to the bookkeepers. In some cases, bookkeepers are even being called upon to serve as strategic advisors, interacting directly with clients. You can read more about that here.
Technological advancements also now require accountants to provide higher level insights to an organization’s leadership, which might directly impact decisions. Lower-level, repetitive tasks are being automated, which frees both bookkeepers and accountants to broaden their skillsets.
This can be seen regarding the hiring industry trends. According to payscale.com, experience with budget management, financial applications, and data analysis all affect the salary expectations of an accountant, with financial analysis impacting salary the most. Conversely, bookkeeping (as a skill) showed a 9% decrease in the effect on salaries. Unsurprisingly, the range for a bookkeeper’s salary is significantly more limited than that of an accountant, averaging between $36,000 and $47,000 nationally. Accountants on the other hand show range of about $46,500 to $56,000 annually for their junior-level positions. This of course is impacted by qualifications, company size, and location.
Bookkeepers are generally thought to handle the day-to-day, while accountants oversee the strategic-level objectives. While this still carries some truth, it no longer accurately represents the industry as a whole. Does this mean that bookkeepers will soon cease to exist, replaced by swaths of mindless, number-crunching robots? Of course not. What it does mean is that viewing either of these professions based strictly on what they used to do is an oversimplification. Instead, identify exactly which duties need to be fulfilled. Perhaps your business needs an accountant to act as an extension of the CFO. Perhaps you just need a specialist to help you clean up your records and untangle your expenses and assets. Perhaps you need both. Knowing what specific skill gaps you need to fill can help you in targeting the candidate with the right qualifications.