This article compares and contrasts the responsibilities of a CFO versus a Controller, Accountant or Bookkeeper. Many business owners do not understand the differences between the roles and the value a CFO can bring to the business. Additionally, many business owners do not feel they can provide a CFO, however that is where a part time CFO who participates with the business owner and management is basic. A part time CFO can use as little as a day or two month with the business and add value to the bottom line.
A. CFO Responsibilities:
1. Cash Management
Cash management includes understanding your business’s “operating cycle” (i.e. cash to cash cycle). To enhance your “operating cycle” it is imperative you understand what it method, how to calculate it, and what influences it before you can enhance it. Cash expectations your cash balance to be in 6 months?” Most of the time companies are fighting cash flow problems today and can’t think about the future past this week. Forecasting and managing cash flow provide a real sense of control over the business. Implement a Cashboard-Dashboard, 13 week cash flow forecast and review cash flow reports at the minimum monthly. The meaningful for any business is to focus on cash, not just EBITDA and Net Income, as Cash is King!
2. General Financial Sophistication
• A sounding board for the owner in making meaningful decisions, as the Trusted Advisor
• Fewer cash flow surprises using a Cashboard-Dashboard and 13 week cash flow forecast
• Better trained accounting staff
• Better documentation and controls
• Fewer surprises relating to tax payments and effective communication with the CPA for taxes
• different, recommendations and solutions to company problems
The current course of action of developing, implementing and reviewing the budget and its associated variances to actual results. The CFO helps correlate the operations and financial results of the business so the management team understand the financial impact of the decisions they make.
The current course of action of keeping in compliance with bank, investor covenants, tax versus management reporting working papers, insurance, corporate minutes.
5. Financial Oversight and Management
Analyze and review monthly P&Ls and Balance Sheet and Cash Flows with the board and management team. Look at the story behind the numbers, not just the numbers. excursion toward data-pushed decision making. Monitor meaningful business metrics using a dashboard which gives you the vital statistics in the areas needed to monitor working capital. for example, each month a report is produced showing information such as aged receivables, receivable days, inventory levels by category, inventory turnover, and days in payables. These statistics should be looked at and compared month by month to determine if the problem is getting better or worse. Trending and associated examination and decision making is a meaningful CFO function. Action should be taken closest when the numbers show a trend that will be bad for the company.
supervise the activities, work and quality of the Controller/Accountant/Bookkeeper. Working capital and treasury management. Overseeing CPA relationship, business lawyer relationship.
Working capital planning and forecasting. A simple Cashboard-Dashboard report will focus management in the right areas, and help to move the business into stronger cash performance.
Review financial reports before sending to investors or any other external party.
6. meaningful Ratios
Track and analyze meaningful financial ratios against industry standard benchmarks. Put plans in place to go beyond certain industry ratios, or make decisions to not meet certain ones, to meet others, and to go beyond others.
Gross margin examination by product line, products or customer is basic for small businesses. Migrate towards having the internal systems provide information to manage gross margins for product lines and products.
8. Processes and Systems
Design, implement and continue accounting processes and procedures. Processes, whether proven or not, exist in all businesses. It is the way staff perform the work necessary to produce products or sets. In most small businesses, the inner processes to accomplish the work are rarely proven or reviewed as a whole (i.e. system). Developing efficient and effective systems and processes generally reduce costs and/or enhance productivity. In businesses where there is a planned exit or merger or sale of the company, proven processes are basic so the buyer gets more value from the company, and the investor/buyer does not have to these things themselves.
This goes beyond just the financial area of the company to operations, sales, marketing, technology, HR and all areas of the company. The more these course of action areas are fully proven, the higher the value of the company.
9. Internal Controls
Structure, work and authority flows. Theft avoidance, cash tracking, accounting processes that limit access. Internal control procedures reduce course of action variation, leading to more predictable outcomes. Focus is on effectiveness and efficiency of operations, reliability of financial reporting, and compliance with laws and regulations.
10. Strategic Planning
As a company grows towards an exit/liquidation event, a strategic planning course of action is basic. This is not as much a document, but more an current course of action to analyze and describe the strategic goals and tactical implementation. Parts of the strategic plan include: SWOT (Strengths, Weaknesses, Opportunities and Threats) examination, ideal customer profile, competitive examination, short and long term action plans. The CFO guides the business by the preparation for an exit strategy in order to maximize enterprise value.
11. Corporate Credit and Collection
Establish and enhance corporate credit standing. Separate personal from business credit reporting so the company’s credit stands on its own following the seven steps to success in developing business credit.
supervise external accounting and other audits as required.
13. Information Systems
supervise the continued improvement of internal operations for information systems. Well proven IT systems, software and hardware asset tracking are meaningful factors when a buyer completes IT M&A due diligence for to a company that wants to be sold.
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.
B. Controller/Accountant/Bookkeeper Responsibilities:
1. Main Responsibilities
The main responsibilities of of the Controller/Accountant/Bookkeeper are to continue and function the books and records of the business. Prepare, control, balance and check various accounts using standard bookkeeping methods. go into daily/weekly/monthly financial transactions in QuickBooks or other accounting software. continue general ledgers recording the position of various accounts and make sure that all the accounts balance. Prepare financial statements. Verify the accuracy of computerized accounting and record-keeping systems.
*Payroll and Check Registers
*Payroll Check Writing
*Payroll Tax Returns
*Monthly, Quarterly, and Annual Payroll Reports
*Federal, State and Local Tax Reports and Filings
*Accurate and Timely Data Entry
*obtainable for phone call questions
*Validate trial balances
*Interface with vendors as needed
2. Standard Operating Procedures (SOP)
Under the guidance of the CFO, document the accounting and bookkeeping standard operating procedures manual. Help the CFO create the complete accounting course of action documentation, review for improvements, and update the time of action to increase streamlined accounting/bookkeeping processes.
continue best practices accounting and bookkeeping in compliance with General Accepted Accounting Principals (GAAP).
There is a meaningful strategic and tactical difference between the value a CFO brings to the executive leadership of a business and Controller, Accountant or Bookkeeper. The meaningful is for the CEO/business owner/entrepreneur to schedule an initial meeting with a CFO, access the business need, and determine an action plan to excursion the business to the next level of sales and profit. As mentioned in the introduction, most small businesses cannot provide a complete time CFO, so a part time or virtual CFO is the ideal arrangement. The meaningful is find a CFO with experience that can be the Trusted Advisor to the CEO/business owner/entrepreneur and provide financial, operational and business insights.