Hi, I Work in Finance. Oh Yeah? What Do You Do?

Recently, I had a prospect ask a detailed question that made me pause for a minute. He asked: How is a Fractional CFO different from a bookkeeper? What I realized is that while it’s easy for me, as an accountant, to understand the subtleties, for most small business owners it’s not.?

Over the years,? I have noticed that business owners who have not worked at larger organizations or companies that have dedicated finance departments are less likely to understand the impact a Chief Financial Officer (CFO) can have on a business. And for these individuals, it’s easy to understand why it’s hard to delineate different financial roles from one another.?

So I realized that there were more people who may not understand the varying roles within the world of finance.?

Here are a couple of key, conventional tasks and roles:

• Accounts Receivable / Accounts Payable Clerk: These individuals specialize in sending out invoices to customers (AR) or organizing payments made to vendors and supplies (AP). Generally, these people are in companies with a high volume of transactions, such as appraisal companies, clothing retailers, and consumer goods.?
• Bookkeeper: This role is responsible for ensuring that all business transactions are entered into the general ledger and that the fundamentals of all accounting transactions are fulfilled (debits=credits, assets = liability + equity, etc.). This role is fundamental to all businesses because each transaction needs to be accounted for in the correct business application (Quickbooks, Bill.com, NetSuite, etc.).
• Controller: This role typically oversees the bookkeeper, clerks, and all the finance functions. This role will be responsible for financial reporting and its accuracy, providing business owners with accurate data that has been compiled and organized from other departments within the company.?
• Chief Financial Officer: The CFO, at its core, is the business partner for the owner/entrepreneur. He or she is responsible for fulfilling the vision and mission statement that the CEO sets for the company. The CFO ensures that all business metrics, goals, Key Performance Indicators (KPIs), and vision are supported by the finance and related functions of the company. Many CFOs are responsible for non-financial areas as well such as Human Resources (HR) and Information Technology (IT) because of how interconnected other business functions are with a company’s finance function. The CFO will ensure that the CEO’s direction for the company is financially supported.?

As you can see, all these roles are important, but vary in the types of requisite skills. Most small businesses employ a finance role between clerk and controller. The true value of a CFO is to be a strategic partner and help business owners fulfill their highest potential — specifically by ensuring that all options and opportunities related to finance and cash flow are pursued and understood before final decisions are made. In short, CFOs provide the financial acumen to help operations run more smoothly and efficiently.?

Take-away: If you are looking to see if a Fractional CFO is needed to help complete your company’s vision and mission, reach out to Brian at [email protected].