Does Your Business Need a Bookkeeper or a CFO?

In the world of SME business, business owners make the most of available resources and budgets to manage the integral finance operations. In lieu of large budgets, SME’s have typically made do with one bookkeeper or finance person internally and an annual visit to their accountant at year-end – with all their records in hand.

In comparison, large corporations that have the resources to employ full finance teams, typically consist of a team of accountants and assistant accountants, led by a Financial Controller and Chief Financial Officer (CFO). The team is managing the finance operations on a daily basis and creating the long-term strategy for business growth.

So if you had the option for your business, which resources would you like for your finance operations?

What’s the difference between a bookkeeper and a CFO?

A bookkeeper is traditionally responsible for:

  • Keeping accurate financial records
  • Performing accounting transactions
  • Creating financial reports
  • Monitoring internal controls
  • Reconciling cash and other accounts
  • Performing routine financial and administrative functions

A bookkeeper is typically the day-to-day manager of tactical accounting issues. The primary function of the bookkeeper is to maintain and operate the books and records of the business, looking back at data already generated.

A growing business requires solid, strategic leadership; this requires much more than a bookkeeper can or should provide.

A CFO is responsible for:

  • Projecting financials to aid in strategic decision making
  • Interpreting financial data and trends for management use, looking at the story behind the numbers, not just the numbers
  • Financial planning, both long and short-term
  • Developing effective capital structure, managing institutional assets, managing lender/banking relationships
  • Managing effectiveness and efficiency of operations
  • Managing and understanding financial risks

A CFO takes on a broader role in planning for the current and future financial needs of the business. While the primary function is to look ahead, the CFO must also be able to understand past financial performance in order to accurately predict the organisation’s financial future.

Bookkeeper or CFO?

A Bookkeeper’s role is to look back.

Read More: The ATO: Improving Invoicing Processing & Supporting Small Businesses

A Chief Financial Officer’s role is to look forward.

From our experience, with the absence of a true CFO, key responsibilities are delegated to inexperienced employees – resulting in missed opportunities and reactive decision making.

Alternatively, Senior Management (typically the Managing Director or Business Owner) assumes the duties of CFO in their “spare time”.

A business cannot reach its full potential without a true CFO, and the right finance team structure behind it.

And did you know that you can engage a Virtual CFO, without hiring an internal CFO with the executive salary price tag?

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