Do you need a bookkeeper or an CFO?
As a business owner, it can be challenging trying to figure out the next hire to take your business to the next level. Often, business owners wear multiple hats, balancing all the responsibilities of running a business with no time to invest in the future of the company. At The Finance People, we often find that businesses come to us thinking they need a fractional CFO, but following an audit and consultation, we conclude they need a bookkeeper - and vice versa. There can be a lot of crossover between different roles within a finance team, and this can be confusing, that is why, in this blog, we will take a look at whether you need a bookkeeper or a CFO.
A bookkeeper is a key member of your finance team; they are an accounting professional responsible for maintaining detailed records of financial transactions such as purchases and sales. How the records are collected and stored will vary due to preference and the systems available, but the role itself doesn't vary greatly between businesses.
Whereas a CFO is an individual taking the lead of the finance team within your business, usually reporting to the directors or CEO. A CFO has a wide company view that puts them in a position to offer financial and business advice, as well as being responsible for strategic planning, negotiating contracts and managing investor relationships.
In this blog, we will take a look at the key differences between the roles to assist you with deciding whether your business needs a bookkeeper or a CFO.
The Role of a Bookkeeper
As we have discovered, a bookkeeper is a member of the accounting staff who is tasked with maintaining detailed records of a business’s financial transactions. A bookkeeper differs from an accountant, as accountants will use the information collated by bookkeepers to create reports and advise a business on trends and forecasts. However, in some cases, bookkeepers may share some responsibilities with an accountant, such as tax returns or preparation of annual reports. Traditionally, a bookkeeper’s sole responsibility is to carefully document all financial transactions in a ledger. However, some businesses do choose to involve their bookkeeper in strategy development. The core responsibilities of a bookkeeper are:
Collating financial transactions on software such as Xero or Quickbooks.
Uploading sales invoices and purchase invoices
Checking the books against bank statements to establish accuracy
To summarise the business finances in reports when required
Bookkeepers are beneficial to smaller companies that may not require the full services of a CFO. If your business does not have plans to raise funds or require an exit strategy, then a bookkeeper can provide the financial services needed. A bookkeeper can provide the business owner with the essential information required for management information and can process invoices to save time and resources for the business owner. You can have a bookkeeper who works on or off-site depending on what suits the needs of your business, and there are even options available through The Finance People to recruit a bookkeeper for just one day a week if this is all your business needs support.
The Role of a CFO
A CFO is the leader of everything financial within a business, only superseded in authority by the directors or CEO. CFOs are crucial to a business for providing strategic advice to help the business grow and achieve its business goals. The core responsibilities of a CFO are:
To lease with the directors and the rest of the wider business
Provide strategic planning and assist with implementing strategies
Manage investor relationships
Manage departments such as finance, HR and IT.
Negotiate contracts
Manage debt
Provide market analysis
A CFO is beneficial to a business that wants financial support that is extremely strategic and detailed from an individual who can build financial models. A business can rely on its CFO to carry out a vast array of financial tasks, including submitting cash flow forecasts to the banks to raise funds. The Finance People are also able to offer fractional CFO services to businesses that are looking to have the support of a CFO on a flexible basis.
The Differences Between a Bookkeeper and a CFO
Many factors strike a contrast between the two roles, the main one being that a skillset as a bookkeeper is not required to have the qualifications or experience needed to be a CFO. Additionally, the level of involvement sets these two roles apart as a CFO will have a much greater level of involvement within the wider business and strategic planning.
The amount of responsibility is another factor that differentiates a bookkeeper from a CFO, as a bookkeeper is responsible for the essential task of maintaining records, whereas a CFO will be responsible for providing valuable feedback and strategies based on the information provided. Last but certainly not least, a big factor that separates these roles is the cost. Due to the skillset and responsibilities undertaken by a CFO, you can expect to pay more for their services than that of a bookkeeper.
Factors to Consider When Deciding Between A Bookkeeper and a CFO
When deciding on whether your business needs the services of a bookkeeper or a CFO, you will need to consider the size of your business as well as the resources currently available. You will also need to factor in the financial needs and goals of the business to decide between a bookkeeper and a CFO; ambitious goals will require the strategy provided by a CFO, whereas businesses still trying to establish themselves may benefit better from a bookkeeper.
Finally, the available budget will play a huge role in deciding between a bookkeeper and a CFO. Smaller businesses may not be in a position to recruit a CFO, no matter how beneficial they may be.
Hiring Finance Experts for Your Business
Thankfully, The Finance People can provide affordable options to SMEs and start-ups with flexible access to part-time finance experts of every level. We have a solution for every budget, from a part-time CFO working once a week to bookkeepers working remotely to support your business.
By leveraging our part-time finance solutions at The Finance People, not only will you get support in finding the right fit for your business, but we will also provide ongoing support. Plus, should your dedicated finance expert be sick, on maternity leave or otherwise absent, we can provide additional support.
If you are still unsure about which finance professional your business would benefit best from, get in touch with us for a free consultation to discuss your business requirements.