|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, lead 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.
We understand there are multiple factors at play when growing your finance operations – long term strategy, expansion plans, existing teams. It’s important to understand the difference between a bookkeeper and a CFO – they are complementary roles, not the same thing.
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 the 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.
A Bookkeeper’s role is to look back.
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.
An expert Virtual CFO can be a part of your team in a matter of weeks, bringing their expertise and industry knowledge with them. It’s worth the investment in your business’s future and reclaiming your spare time for something more enjoyable.
Rachael Turner is a member of the Virtual CFO Association.
The Virtual CFO Association is an elite peer network, advocating and promoting the emerging VCFO sector within the accounting profession. Collectively the association currently has over 500 years of industry experience, with highly qualified and experienced specialists spread across more than 20 industry verticals.
If you would like any more information regarding the Association of VCFO’s please visit our website www.vcfoassociation.com.au