As a provider of part-time CFO and Controller services, the above question is usually the first question asked by potential clients. Titles such as Bookkeeper, Controller and Chief Financial Officer(CFO) can get tossed around rather loosely in the small and medium size business world. Today we’ll define the general duties of each position and their strategic roles within your organization.
A bookkeeper performs basic financial record keeping and can create simple financial reports. A bookkeeper will typically perform the following basic tasks:
- Keep accurate records of financial transactions and can create basic financial statements (Income Statement and Balance Sheet) using your accounting software.
- Perform basic A/P management – makes sure bills get paid and then records these entries into the accounting system.
- Perform basic A/R management – if the business has to send invoices to customers to get paid, sends out invoices usually once a month.
Although the tasks are basic, attention to detail is of the utmost importance in the bookkeeping profession. A few data entry errors can cost your company a significant amount of time and money. The bookkeeper, or the accountant, of your company is an essential element of your administrative team.
Adding a controller adds more power to your financial management. In fact, a good controller will pay for itself in a growing company that needs more advanced systems by helping to keep costs under control and by helping to better manage cash flow. A controller performs the following tasks:
- A controller will either perform all of the functions of a bookkeeper, or supervise the staff that does.
- They can create customized daily, weekly and monthly financial reports to meet the specific needs of your business.
- They have the knowledge to choose and maintain financial software.
- They can take over the basic cash flow management of the business. But major cash flow decisions will still be up to the business owner.
A good controller is worth their weight in gold to any small or medium size business where cash management is a strategic factor in success.
The CFO is in charge of the overall financial management of a company. Planning, projecting, measuring and tracking financial and operational progress fall under the CFO’s umbrella. A CFO’s duties include:
- Supervise accounting and operational departments and can perform all functions of a Controller.
- Analyze and review the monthly Income Statement, Balance Sheet and Cash Flow with the management team. Also looks at the story behind the numbers, not just the numbers, and drives toward data-driven decision making.
- Create complex financial projections to aid in strategic decision making, and is an active player in the strategic management of the business.
- Direct the business in the development of an effective capital structure by securing debt financing at attractive terms, managing the lender relationships and ensuring compliance to the debt terms.
- Focus on effectiveness and efficiency of operations, reliability of financial reporting, and compliance with laws and regulations.
- Be the key contact for financial relationships in the banking and legal community as well as with major vendors and clients.
In conclusion, there is a significant strategic and tactical difference between the value a CFO brings to the leadership of a business and that of a Bookkeeper. Because most small and medium size businesses cannot afford a full time CFO, then a part time CFO would be an ideal arrangement. The key is to find a CFO that can be your trusted advisor and provide financial, operational and business insights.
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