“I think we’ve outgrown our bookkeeper.”
This is one of the most frequent statements I hear from business owners and nonprofit leaders. As the organization grows, the leader begins to recognize the need for visibility on their financial information and strategic insights to support decision-making. They know something is missing, and they often think the problem is they’ve grown beyond the skills and capabilities of their bookkeeper. The real issue is most often that they’re expecting the bookkeeper to fill multiple finance and accounting roles, instead of the one role they were hired for.
What’s the difference between a bookkeeper, a controller, and a CFO?
There are three common roles in a finance and accounting team: the bookkeeper, the controller, and the CFO. Usually, the organization hasn’t outgrown their bookkeeper. Instead, they’re missing the controller and CFO functions.
Each business needs at least a fractional share of each of these three common financial roles:
- Pay bills
- Invoice customers
- Deposit customer payments
- Record transactions in accounting system
- Oversight of bookkeeper
- Reconciliation of accounts
- Provide financial reports and dashboard metrics
|Reliability & Visibility
|Chief Financial Officer (CFO)
- Translate financial reports into operational insights
- Cash flow projections
|Predictability & Flexibility
The bookkeeper and controller roles are rooted in historical information. They capture what has already happened and provide visibility on it. The CFO role is strategic and future-focused. The CFO uses the reliability and visibility of historical financial information as a basis for predicting what will happen in the future (in the form of budgets, forecasts, and projections). Then, they compare actual results (as reported by the controller) against those predictions. The difference between the actual and expected results can then be translated into operational insights for leaders allowing them to flex their strategies and plans accordingly.
Now that you understand the three different roles, their primary responsibilities, and the valuable outcomes of each role, you likely recognize some things you’ve been missing. However, this doesn’t mean you necessarily need to hire additional full-time finance and accounting team members. Most organizations can leverage Virtual CFO Services to augment their existing team for quite some time before investing in a full-time Controller or CFO.
Take our quick self-assessment to grade your current finance and accounting function. Then, you’ll have a clear understanding of the capabilities you have covered and the gaps that need to be closed.