If you’re new to the business world, we understand that technical jargon related to finances and accounting can confuse you. Whereas you do not have to perform such operations yourself, you must be clear on certain concepts. In this post, we’ll take you through the differences between bookkeepers, controllers, and CFOs, to help you make the proper hiring and outsourcing decisions.
What is a Bookkeeper?
Bookkeeping is an entry-level role required for data generation and record-keeping. A bookkeeper’s role includes creating and maintaining financial records of day-to-day transactions of a business, for instance, purchases and sales. They paint a neat picture of an organization’s cash inflow and outflow in a manner that’s easy to comprehend so that accountants, controllers, investors, and CFOs can read it. Alongside financial transactions, this includes maintaining:
Payroll
Invoices
Debits and credits
ledgers, accounts, and subsidiaries
It’s essential to remember the limitations of this role. A bookkeeper will maintain your data, but it is not their responsibility to ensure that the books are recorded per GAAP and changing accounting standards. You need a more experienced individual to provide such direction and maintain technical oversight over the bookkeeper, and that’s where a controller comes in.
What is a Financial Controller?
In smaller organizations, controllers perform the leading roles related to finance.
A controller, ideally, has more than five years of experience in the field and understands the technical nuances of accounts and finances. We personally recommend going with controllers who are Certified Public Accountants, as that qualification requires extensive training, knowledge, and expertise.
Controllers guide bookkeepers to ensure that the organization has a complete, compliant, and accurate record of data per different accounting standards so that the company’s books can be closed.
Though a controller’s duties vary per organization, they generally revolve around protecting a company’s assets and reporting on their position. Some responsibilities include:
Overseeing and balancing a business’s cash flows
Developing and monitoring controls to safeguard company assets
Participating in budget creation
Ensuring compliance with state and industry-specific laws and regulations related to finances and taxes
Invoice approval
Reporting and analyzing finances to facilitate informed decision-making and plan execution
Coordinating with relevant external parties, like banks and tax auditors
So, whereas a bookkeeper will record data, a controller will make sense of it, oversee the current financial performance, and point out what’s working and what’s not. This information is critical for forecasting and strategizing, and that’s where CFOs come in.
What is a Chief Financial Officer (CFO)?
A CFO is your financial strategist who oversees the company’s financial activities in the larger picture. CFOs have to ensure the company meets its revenue and earning goals and keeps cash flow stable. To do so, they need a consistent report on the company’s current position that the controller provides them with.
For the most part, the role of a CFO is a forward-thinking one, involving aspects like:
Keeping the returns on investments high
Financial forecasting and modeling
Ensuring liquidity
A CFO can cost you around $417000 on average.
A CFO will analyze all financial situations against the company’s future goals. They’ll identify the business’ financial needs and devise pathways, and lay out the requirements to fulfill those needs. CFOs will also be concerned about revenue generation and funding needs, highlighting and forecasting the situations to take loans and look for investors timely.
Fitting the Pieces – The Larger Picture
The roles and responsibilities of bookkeepers, controllers, and CFOs may overlap in some areas, but all branch out to make up the skeleton of a company’s financial reporting, analysis, and forecasting.
You need a bookkeeper to produce and maintain accurate records on a daily basis, a controller to make sense of that information, compare actual vs. forecasted positions, identify reasons behind any discrepancies, and make budgets. And to ensure your firm has a well-rounded future forecast, you need a CFO who will predict your firm’s needs and devise ways to fulfill them based on the controller’s analysis.
What Should Startups do?
Startups often begin with a bookkeeper and expect them to make complaint records and cost-effectively provide value. However, we strongly advise against this approach as a bookkeeper’s training is simply not up to par with a controller’s, and neither is it their responsibility to present data as an accountant can.
For an in-house team, the best approach is to begin with a controller and a bookkeeper. And if you’re rapidly growing, you need a controller, a bookkeeper, and a CFO, all three. Trying to minimize costs by hiring a bookkeeper and a CFO only will leave a vast information gap to be bridged, so that’s an inefficient approach as well.
This method is costly, especially for firms that aren’t very established yet. That’s where Trusteer comes in.
Trusteer’s Services – The Perfect Blend
Outsourcing is the most financially optimal way to proceed for companies that aren’t at scale or don’t yet have the financial means to hire individuals full-time for such roles. Trusteer offers the perfect mix of bookkeeper’s, controller’s, and CFO’s services in this regard.
With us, you’ll get a package that includes vital bookkeeping services, part controller services for the technical and managerial aspects, and part CFO services for strategic decision-making. And the entire package will cost you as much as hiring one controller or less!
Then as you grow and begin hiring your team, we’ll help you transition instead of abruptly halting our services, offering a flexible client-centric approach.
Contact us today to outsource your financial and accounting operations and get the best service package out there!
