Operations

What are Accounting, Operations & Administration

Written by gilahalleli

A short post, containing a few basic definitions.  This post probably should have come first, now that I think about it.  The below is intended to give you guidelines and a feeling for what is what, as opposed to setting down hard rules that you will be tested on at some later date.  No testing here, at CFO Secrets.

Accounting

Accounting deals with the identification, collection, measurement, processing, analysis, recording and reporting of financial information.  That was a mouthful, no?  Here are some practical examples of where your business will encounter accounting or you will engage in accounting tasks yourself, perhaps without even knowing it!

  • Balancing the company’s bank account
  • Invoicing customers and paying suppliers
  • Writing up your annual budget
  • Comparing your budget to actual results
  • Bookkeeping and payroll calculations
  • Annual financial statements and annual audit
  • Reporting on grant program fund use (e.g. BIRD Foundation grants, EU grants, OCS grants)
  • Tax returns of all kinds (corporate income tax, VAT, National Insurance and lots more)

Administration and Operations

Administrative activities and costs support the company while operations activities and costs support what the company does.

Administrative activities and costs are the functions and costs that go into running the company itself, so that the company  can get on with doing whatever it is that the company does.   Operations activities and costs, on the other hand, are focused on that “what the company does”.  These are related to the different elements of the company’s business, such as providing services to clients, producing products for the customers, sales and marketing activities, product development and so on.

For example:

Administration Operations
Human Resources Manager Customer Support Representative
IT Department R&D Department
Renting space to use as company’s offices Renting  a laboratory for the R&D team
Office supplies Marketing materials
Payroll cycle Sales cycle

Bear in mind that the definitions of “administration” and “operations” can be a bit fuzzy. If you do a search online, the definition seems to morph from one source to the next, with each source including different items under each of the two headings.  Overall, however, the difference is “the company” versus “what the company does”.

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gilahalleli

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