05 Sep Why Do I need A CFO – Follow Up

So I had someone ask me this question…Tony, could you speak to why a smaller firm needs a CFO’s experience instead of just a bookkeeper/CPA ? Financial management is so key when businesses are just starting out or, looking to take that next step.

o the difference between a CFO and a bookkeeper/CPA is fairly large. So this is really a two part question. First a bookkeeper is just that…a keeper of the books, they are really the person who records the activities of the business, makes sure bills get paid, etc…for the most part they do not have the experience of making strategical decisions. Most of the time they are not skilled in making projections, forecasts, or seeing the big picture of the business. A bookkeeper may not have the ability to dig into the numbers and look at trends, review what they company is making on offerings, etc. A CFO will fill those gaps. In fact I have had conversations with companies that provide bookkeeping services whose clients ask them regularly what’s next…who can help me with these things.

A CPA will be looking at things from a more theoretical standpoint, most of the time they have spent their professional careers as CPAs, and not running a business, They have not been involved in working in the trenches, etc. Also, while they can provide some forecasting, planning, and help with cash flow modeling, they typically have a large number of clients. A Fractional CFO will be working with a fewer number of clients, and is more in touch with the business. A CFO becomes part of the business, and a part of the management or leadership team.

Lastly, your comment about financial management being so important to a business is dead on. So many companies make the mistake of asking for help too late. They are reactive rather than proactive. It’s like closing the barn door after the horses are already out…doesn’t make good sense.