This article compares and also contrasts the responsibilities of any CFO versus an Operator, Accountant or Bookkeeper. Several business owners do not understand the differences involving the roles and the value any CFO can bring to the enterprise. Additionally, many business owners tend not to feel they can afford any CFO, however, that is the place where a part-time CFO who participates with the business owner and supervision is critical. A part-time CFO can spend as little as a couple of days a month with the business by adding value to the bottom line.
A. CFO Responsibilities:
1 . Money Management
Cash management consists of understanding your business’s “operating cycle” (i. e. money to cash cycle). To enhance your “operating cycle” it really is imperative you understand what it means, how you can calculate it, and what affects it before you can improve this. Cash expectations your cash stability to be in 6 months? ” Usually companies are fighting cash flow issues today and can’t consider the future past this week.
Predicting and managing cash flow gives a real sense of management over the business. Implement the Cashboard-Dashboard, 13-week cash flow forecast and review cashflow reports at least monthly. The important thing for any business is to concentrate on cash, not just EBITDA as well as Net Income, as Cash is absolutely necessary!
2 . General Financial Style
• A sounding board for the owner in making essential decisions, as the Trusted Counselor
• Fewer cash flow complications using a Cashboard-Dashboard and tough luck week cash flow forecast
• Better trained accounting staff members
• Better documentation along with controls
• Fewer complications relating to tax payments along with effective communication with the CERTIFIED PUBLIC ACCOUNTANT (CPA) for taxes
• Substitute, recommendations and solutions to firm problems
The continued process of developing, and implementing along with reviewing the budget and its linked variances to actual final results. The CFO helps parallel the operations and economical results of the business so the administration team understand the financial effect of the decisions they make.
The ongoing process of maintaining compliance with financial institutions, investor covenants, and tax compared to management reporting working documents, insurance, and corporate minutes.
5. Financial Oversight and Administration
Analyze and review month-to-month P&Ls and Balance Sheets as well as Cash Flows with the panel and management team. Look into the story behind the figures, not just the numbers. Travel toward data-driven decision-making. Keep an eye on key business metrics by employing a dashboard that gives you the crucial statistics in the areas had to monitor working capital.
For instance, each and every month a report is produced exhibiting information such as aged receivables, receivable days, inventory quantities by category, inventory proceeds, and days in payables. These statistics should be thought about and compared month through the month to determine if the concern is getting better or worse. Styling and associated analysis as well as decision making is a key CFO function. Action should be used immediately when the numbers display a trend that will be harmful to the company.
Oversee the activities, function and quality of the Controller/Accountant/Bookkeeper. Working capital and treasury operations. Overseeing CPA relationship, organization lawyer relationship.
Working capital arranging and forecasting. A simple Cashboard-Dashboard report will focus operations in the right areas, to help to move the business into better cash performance.
Review economical reports before sending in order to investors or any other exterior party.
6. Key Proportions
Track and analyze crucial financial ratios against business-standard benchmarks. Put programs in place to exceed specific industry ratios, or create decisions to not meet specific ones, to meet others, and also to exceed others.
Gross margin analysis through the product line, products or clients is critical for small businesses. Migrate towards having the internal techniques provide information to manage major margins for product lines as well as products.
8. Processes as well as Systems
Design, implement and keep accounting processes and processes. Processes, whether documented or not really, exist in all businesses. Is it doesn’t way staff perform the project necessary to produce products or services. Generally, in most small businesses, the underlying processes to perform the work are rarely documented or may be reviewed as a whole (i. age. system).
Developing efficient along with effective systems and techniques generally reduce costs and/or boost productivity. In businesses that result in a planned exit or maybe merger or sale of the company, documented processes are generally critical so the buyer will get more value from the company, and also the investor/buyer does not have to do these things on their own.
This goes beyond just the monetary area of the company to procedures, sales, marketing, technology, HUMAN RESOURCES and all areas of the company. The greater these process areas tend to be fully documented, the higher the importance of the company.
9. Internal Handles
Structure, work and expert flow. Theft avoidance, money tracking, and accounting processes that limit access. Internal management procedures reduce process deviation, leading to more predictable solutions. Focus is on the success and efficiency of the procedure, reliability of financial reporting, in addition to compliance with laws and regulations.
10. Strategic Planning
As a corporation grows towards an exit/liquidation event, a strategic preparation process is essential. This is not the same amount of a document, but more a continuing process to analyze and illustrate the strategic goals and also tactical implementation. Parts of the particular strategic plan include SWOT (Strengths, Weaknesses, Opportunities and also Threats) analysis, ideal consumer profile, competitive analysis, and quick and long-term action strategies. The CFO guides the business enterprise through the preparation for a get-out of our strategy in order to maximize organizational value.
11. Corporate Credit rating and Collection
Establish and also improve corporate credit standing. Distinct personal from business credit rating so the company’s credit holders on its own following the seven ways to succeed in getting business credit.
Oversee external accounting along with audits as required.
13. Information Systems
Oversee often the continued improvement of inner surface operations for information systems. Very well-documented IT systems, programs and hardware asset pursuing are key factors if a buyer completes IT M&A due diligence for a corporation that wants to be purchased.
Direct the business enterprise in the development of an effective money structure by securing personal debt financing at attractive phrases, managing the lender relationships and also ensuring compliance with the personal debt terms.
B. Controller/Accountant/Bookkeeper Obligations:
1 . Main Responsibilities
The key responsibilities of the Controller/Accountant/Bookkeeper in order to maintain and operate the particular books and records in the business. Prepare, control, equilibrium and check various addresses using standard bookkeeping procedures. Enter daily/weekly/monthly financial orders in QuickBooks or different accounting software. Maintain typical ledgers recording the condition of various accounts and make sure that each account balance. Put together financial statements. Verify the particular accuracy of computerized data processing and record-keeping systems.
*Payroll and Verify Registers
*Payroll Check Publishing
*Payroll Tax Returns
*Monthly, Quarterly, and Annual Payroll Information
*Federal, State and Local Taxation Reports and Filings
*Accurate and Timely Data Entrance
*Available intended for phone call questions
*Validate trial run balances
*Interface with vendors as essential
2 . Standard Operating Processes (SOP)
Under the guidance of the CFO, document the data processing and bookkeeping standard running procedures manual. Help the CFO create the full accounting course of action documentation, review for enhancements, and update the process to increase efficient accounting/bookkeeping processes.
Maintain best practices in accounting as well as bookkeeping in compliance with General Accepted Accounting Rules of science (GAAP).
There exists a significant strategic and a plan difference between the value the CFO brings to the professional leadership of a business as well as Controller, Accountant or Bookkeeper. The key is for the CEO/business owner/entrepreneur to schedule an initial meeting with the CFO, access the business requirements, and determine an action intend to drive the business to the next level associated with sales and profit.
As stated in the introduction, most small enterprises cannot afford a full-time CFO, so a part-time or even virtual CFO is the ideal set-up. The key is to find a CFO with life experience that can be the Trusted Counselor to the CEO/business owner/entrepreneur and provides financial, operational and organisational insights.