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When starting a business, the leader or a family member often “handles the books” given the sensitive nature of the information and the minimal time required for this task when a company has few transactions to process. While the leader sees this work as mostly administrative, the value of the accounting arm grows as the business matures. They soon realize they need more time to focus on overall company performance but do not have the personal capacity to produce the accurate information needed to do so. They start to wonder:
If they don’t have someone inside the company they can ask, they usually talk with their outside accountant. The problem with this is that most outside accountants are focused on reporting for tax purposes, not necessarily for managerial purposes. So, the question arises – do you need a Bookkeeper, Controller, or CFO? Let’s dig into these roles to determine what your company needs.
It’s time to hire a Bookkeeper when the paperwork of accounting duties gets in the way of higher value activities (e.g. generating sales, managing people, etc.) that only you can do. They can execute general tasks such as entering transactions into the accounting software, managing accounts payable and accounts receivable, processing payroll, and completing monthly reconciliations.
An experienced, financially literate Bookkeeper can often punch above their weight and assist with some of the more strategic elements of the business such as budgeting and cash flow forecasting, though they may need help setting up the systems in the beginning.
A Controller oversees all accounting processes and is responsible for timely and accurate monitoring and reporting of the company’s overall financial performance. They are a key player in establishing company-wide financial and administrative objectives, policies, programs, and practices which provide a sound financial structure and maintain the efficient operations of the business. For the most part, Controllers look backward. They can tell you what happened (last month, last quarter, last year) and are there to ensure the accuracy of that reporting.
A Controller’s duties include managing the monthly accounting cycle (AR/AP, payroll, bank deposits, etc.), budgeting, cash flow forecasting, and ensuring business policies, accounting standards, and profit objectives are met. Additionally, they will often oversee administrative staff, IT functions, and sometimes HR. The Controller collaborates with other senior managers to determine financial strategy and plan for the company’s success.
The larger a business grows, the more complex it becomes, and the more value a Controller brings. They provide tactical managerial reporting to the management team (such as dashboards) and weigh in on the financial implications of business decisions. Compared to Bookkeepers, Controllers are often CPAs (the professional designation of the accounting profession) which gives them the knowledge to perform deeper financial analysis and even assist with tax strategies.
A CFO, or Chief Financial Officer, is also responsible for timely and accurate monitoring and reporting of the company’s overall financial performance. However, their role has a more strategic and forward-looking focus than that of a Controller. While a Controller can provide financial insights on strategic decisions, the CFO takes a more holistic view and can recognize, for example, that what might immediately save money through efficiency could cost the company long-term in customer satisfaction.
The CFO takes the information the Controller produces and uses it as just one of the inputs in charting the course to the future. They evaluate opportunities such as new business lines or territories and determine the best plan of action to pursue them (e.g. making a strategic acquisition versus building from scratch). They manage financial relationships with banks and investors and steer the company through changes in business structure and operations.
A CFO may be a CPA or have a different designation, and they may also have a Controller reporting to them. It’s the more holistic and strategic focus of a CFO that separates them from the other accounting positions.
As with any small business, title management can become an issue. Sometimes a person performing the duties of a Bookkeeper is promoted to the title of Controller even though they do not perform that function. If you are struggling to determine which of these positions is right for your business, or how to go about integrating one of these roles into your organization, get in touch. We’re always happy to chat.
Bellrock is a process benchmarking and change management firm based in Vancouver, Canada. If you enjoyed this article, consider sharing it with your networks.