The Differences in a Bookkeeper, Controller, and Chief Financial Officer

The financial component of a company comprises all the essential functions of collecting, tracking, distributing, and reporting the flow of money in and out of the business. It includes billing procedures, collection practices, and accounts-payable processes. It also includes all financial reporting from simple profit-and-loss statements and statements of cash flow to more sophisticated reporting that helps the business team make smart decisions.

Cash flow is the lifeblood of your business, and it’s your financial pillar that makes sure your cash flow volume and vitality is always closely monitored. The financial department also monitors and fine tunes your business’s use of debt as you finance growth or capital expenditures.

There are many types of businesses, and the financial department of each of these businesses can vary. A fledgling business may have no one looking at the financial area. A slightly more complex business generally might have the owner doing the bookkeeping and financial upkeep. A growing company could have a bookkeeper doing the books and a certified public accountant preparing its tax returns. A business in the next stage typically has a full-time controller monitoring and handling the financial area.

A controller is generally a college graduate with either a CPA or certified management accountant accreditation. Most truly successful businesses require a big picture, chief financial officer in addition to a controller and possibly an accounting clerk or two. Keep reading to find out more about the Chief Financial Officer Job description, and how such a person can help your business thrive.

Your business’s financial information is probably the most important aspect of its sustainability. If you don’t know or can’t find out where your business is financially, then the best business plan, the best product, and the best sales team in the world won’t make your business’s heart beat. Time and time again, I meet people at seminars and other events who insist on doing their company’s bookkeeping because they either don’t see the value in hiring a bookkeeper or they don’t trust a bookkeeper to “get it right.”

Accurate and timely bookkeeping is critical to your business’s success. It’s also time-consuming, detail-oriented, and a business owner's time may be better spent elsewhere. Those hours you spend trying to enter receipts and balance your checking account are hours you aren’t spending growing your business. In all honesty, unless you’re a trained bookkeeper, you’ll probably do something wrong.

I’m not suggesting that you bring someone in to handle your business’s financial side, and then completely withdraw. What I am suggesting is that you:

1. Bring someone in to handle the books or outsource that work to a contract bookkeeping service.
2. Have at least a working knowledge of bookkeeping.
3. Understand how to read basic financial statements and information.
4. Establish strong financial controls.
5. Implement the systems you need to keep your company’s financial information accurate and secure.

Perhaps one of the best educational steps you’ll ever take is a night class in bookkeeping and basic accounting. Just having an understanding of double-entry bookkeeping (for every amount entered on the debit side there is a corresponding amount entered on the credit side) and the three main financial statements (balance sheet, income statement, and statement of cash flows) can put you miles ahead.

For those of you who don’t have the 150 to 200 hours it takes to learn basic bookkeeping, check out some of the Fast-Track Financial Fluency products on my Web site, Maui Millionaires. Now, you can knowledgeably monitor your company’s financial records without actually taking the time to do the bookkeeping. In other words, learning how to prepare your own financial statements isn’t the goal. Learning how to read and interpret the story behind the numbers is.

Eventually, most business owners move away from an outsourced bookkeeper and hire a full-time controller. The controller usually has more education and experience and is able to design systems and see the story behind the numbers. Finally, when your business hits the big-time it needs a CFO.

The Chief Financial Officer Job description includes managing capital needs, forecasting business segments and investments in relation to your personal financial statements. It’s like the bookkeeper knows how to play checkers, the controller can play chess, and the CFO can play 3-D chess. The differences have to do with perspective and ability, as well as talent.