finance has two meanings: In a business context, it stands for the financial management of a company, with responsibilities for financing and investment. In SAP Business One, however, the module for legally required accounting records is called Finance.
Business management significance
The Finance function plans, organizes, and acquires the financial resources that a company needs for its resources. The financing provides these resources, for example through additional or early deposits. The investment uses them: The payment, for example for a machine, is followed by later deposit surpluses.
A central objective is liquidity, that is, the ability to make payments at any time. Lack of liquidity is grounds for insolvency. Financial planning therefore takes into account all future inflows and outflows, by amount and date. Financial transactions are called nominal flows. They are contrasted with real flows, that is, goods movements that are usually associated with payments.
Meaning in SAP Business One
The Finance module includes the records that a company is required to keep under the law. Many transactions automatically generate the usual entries and book them in the main ledger. The module includes, among other things, the account plan, the journal entry as a central booking window, the asset account reconciliation, the booking pre-recording, the costing templates, perpetual bookings, foreign currencies, the cost accounting, and the financial reports (balance sheet, summary and balance sheet list, GuV, cash flow).
Demarcation
When speaking about finance in SAP Business One, those who refer to accounting as the main ledger and financial reports do not mean financing and investment. In SAP Business One, the bank administration (bank data, incoming and outgoing payments and their recording) forms its own area. In business administration, the literature on finance and investment is treated as a separate field of study. At the same time, it assigns individual sub-accounts of the accounting system to it, namely the financial and liquidity accounts.
Link to the post
The article emphasizes that finance and accounting should be viewed separately. The professional sources support this separation, but also show the close connection through the financial and liquidity accounting.
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