Many small business owners do not understand the difference between a CFO (Chief Financial Officer) and a Controller / Bookkeeper. Many believe that a CFO and a Controller perform the same tasks. This could not be further from the truth. There are two major aspects to the accounting function:
- Statutory processing
- Utilizing financial information to proactively run the business
The statutory function pertains to processing accounting transactions. Many businesses only use the accounting function for statutory purposes: collecting receivables, paying vendors, paying taxes, paying the bank, etc. Financial statements are prepared primarily to keep the bank “happy”. This type of work is performed by a bookkeeper / accountant and in larger firms is supervised by a Controller who will prepare the financial statements.
Many small business owners are not utilizing financial information to proactively run their business.
Utilizing Financial Information
A CFO assists the business owner in using financial information to proactively run the business by:
- Understanding what the numbers mean and what decisions need to be made.
- Setting company goals and monitoring progress to make timely and appropriate changes to achieve the objectives.
- Forecasting future results and making the necessary changes to achieve the desired outcome.
A CFO provides financial guidance for the company and works closely with the business owner. A CFO’s responsibilities include (but are not limited to) providing and managing:
- Financial analysis
- Cash management
- Strategic planning
- Cost accounting
- The accounting function
- Information technology
- Human resources (in many companies)
- The banking relationship
- Risk management
- Outside accountants
Business owners not using financial information to proactively run their business are at a competitive disadvantage.
If you are not getting exceptional financial guidance, contact CFO 4 Small Biz™.