What do all these Finance People do?

As someone who's worked closely with (and hired, trained, and mentored) various finance and accounting professionals, I'm very familiar with the intricate ecosystem that makes up this crucial department. Today, I want to share the different roles that keep your company’s financial house in order:

First let’s look first at Cash-In:

Accounts Receivable (AR): AR is not just about sending invoices, you also have to keep an eye on outstanding invoices and collect from slow or non-paying customers, work with the Sales teams and stay on top of upcoming billings.

As for Cash-out:

Payroll: This team ensures everyone gets paid accurately and on time. They process employee salaries and wages (did you know that every state has different rules? and that all of your PTO and hours worked must be calculated perfectly well in advance of payroll day?).

A lot of companies have outsourced payroll. Even if this is the case, there are a lot of payroll-related functions that are handled by Accounting. Many times, it’s the Accounting folks who catch the human errors when they are booking and reconciling entries.

Accounts Payable (AP): Most people know that the AP team processes incoming invoices and makes payments. They are responsible for catching discrepancies and making sure invoices are correct and approved.?

You might think this is easy and they shouldn’t need your input but if invoices are coded incorrectly (put to the wrong expense account) or not approved, your financial statements will be wrong and your forecasting will be off.

Reporting / Record Keeping

Senior / Staff Accountants: The Staff & Sr Accountants (differentiated by their level of experience) are the ones putting the financials together. They do all the things (entries) needed to close (finalize) a financial period. And they make sure all the accounts are balanced: ever tried balancing your checkbook? Now imagine doing that for an entire company, with thousands of transactions (most of which you didn’t personally make) and hundreds of accounts.?

Controller: The Controller manages the whole process of closing the month (as well as the AR & AP functions, etc.) and reviews all the financial information provided by the teams to make sure it’s all correct and accurately reflects the company’s financial activities. They also implement and maintain internal controls in order to ensure that no one can accidentally (or intentionally) mess with the company's finances.

FP&A?

Financial Planning and Analysis (FP&A): These are our forward-thinkers. The FP&A team develops financial forecasts, models, and budgets. They use all the historical information provided by the Accounting team and apply it to future performance. They look at the trends to guide their predictions and provide insights to guide strategic decisions.?

Other Finance & Accounting

Tax: Tax specialists are vital in navigating the complex world of corporate taxation. They are usually external and they are vital. Your outside Tax CPA will work with your Controller and/or CFO to prepare and file federal, state, & municipal tax returns, ensure compliance with tax laws & regulations, and manage tax audits from tax authorities. They will also help you with tax planning so you don’t pay more than your fair share

Internal & External Audit: Many large companies have Internal Audit teams who provide an independent check on the financial operations. They evaluate internal controls to make sure company processes are strong enough to ward off fraud (both internal and external).

Most companies also have external auditors that create audited financials for investors, banks, and other stakeholders. The external auditors work with the company’s accounting team to get all the information they need to compile their report.

And finally (my personal favorite) - The CFO: The Chief Financial Officer is the role that ties all these roles together. But what does a CFO actually do? Well, as a CFO, I spend a lot of time working closely with the CEO, Board, and Executive team on the strategy for the company and of course I support all the roles mentioned above.

I present the company’s financials to the Board and other stakeholders, handle investor relations and inquiries, and work with banks and VCs on Fundraising.

I tend to work closely with the team on forecasting cash (particularly when cash is tight!) and I review all contracts (sales, vendors, and corporate, etc.).?

I also wear a lot of hats and manage many issues that arise during the day-to-day of running a business. Stay tuned for a whole article about the CFO role!

Each of these functions plays a critical role in keeping our financial house in order. Together, they form a powerhouse team that not only keeps track of where the company has been but also charts the course for where it’s going.?

What's your experience with finance and accounting teams? I'd love to hear your thoughts in the comments!

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