🔒How to: Determine whether you need a bookkeeper, controller or CFO

Bookkeeper, controller or chief financial officer — the distinction can be confusing. The titles can get tossed around rather loosely among small- and medium-sized businesses. Today we’ll define the general duties of each position and their strategic roles within your organization.

Bookkeeper

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 accounts payable management — makes sure bills get paid and then records these entries into the accounting system.
• Perform basic accounts receivable 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.

Controller

A controller adds more power to your financial management. A good controller will pay for itself. A growing company needs more advanced systems, which is it is more likely to afford if it keep costs under control and better manages cash flow. A controller handles the following tasks:

• Performs all of the functions of a bookkeeper, or supervises the staff that does.
• Creates customized daily, weekly and monthly financial reports to meet the needs of the business.
• Chooses and maintains financial software.
• Takes over the basic cash flow management of the business.

A good controller is worth his or her weight in gold to any small or medium size business where cash management is a strategic factor in success.

Chief financial officer

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 job is to:

• 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.

Andrew Wood, a consultant at Opus Consulting Group, can be reached at andrew@opuscg.com