Which is Best for Your Business?
There are different levels of financial support that a business will need over time. Do you need a Bookkeeper, Controller, or CFO? Which is the right resource for your business will depend on many factors.
The first person to whom you should ask this question is your CPA. Your CPA should not be the one filling the role of Bookkeeper, Controller or CFO. Why?
- CPA’s are too expensive to fill this role
- CPA’s should remain independent and at an arms-length from the day-to-day operations of your business.
If you do not have a CPA, I strongly advise you to interview a few good, reputable firms and retain one you feel comfortable with, that you like, and that you trust. You do not want to rely on accountants who are not certified, on enrolled agents or on tax services.
If you want to expand and grow your business, CPAs can grow with you. They will be the most up-to-date on all tax and accounting laws and changes. The others might not.
This is how most companies start out when it comes to financial reporting. Sometimes small business owners use their spouse or family members for this function. It is not advisable to do this.
You should either be outsourcing this function or hiring a person or firm that does bookkeeping as their profession. No matter what, hold them accountable for performing their duties and fulfilling their job description.
Having a controller is usually the next stage or level of financial reporting when you outgrow a bookkeeper. A controller is as much a hands-on financial person as a bookkeeper, but with a lot more knowledge of accounting and finances. This person should be the owner’s go-to-person when it comes to how financially weak or strong the company is at any given time.
CFO – Chief Financial Officer
CFOs are generally hired when a company reaches a certain size, has an internal accounting department, and needs someone to oversee all accounting functions, financing for the company, and working intimately with the owner on the future growth and vision of the company.
The CFO also is usually the front person that deals with the company’s banks and lenders. Sales in excess of $2 to $5 million can usually justify a CFO. A CFO should be considered the owner’s right-hand person.
Small businesses sometimes hire a part-time or outsourced CFO. This option enables the small business to get the skills of a CFO at a more reasonable cost and should be considered if your business has more complex financial requirements.
Whichever person or firm you hire for ANY of the above positions, please perform your due diligence before you hire or engage them. They will be responsible for handling all of the company’s money and finances.
No doubt, you have heard all the horror stories of fraud, theft, and embezzlement. You can stack the deck in your favor by doing proper due diligence before you hire a bookkeeper, controller or CFO.
Do the following for all employees:
- Credit Checks,
- Background Checks,
- Criminal Checks,
- Personal and Professional Reference Checks.
Getting references from people you know and trust are helpful. Especially helpful are references from people who have hired and worked with your potential bookkeeper, controller or CFO in the past for a long period of time.
This is just the tip of the iceberg in hiring a financial resource for your business. Understand that this resource is probably the most important employee you will ever hire. You may want to engage a trusted advisor to guide you with this important hire.
For over 25 years, George has been helping business owners and real estate investors find and obtain business loans and commercial mortgages. George has owned several businesses, bought and sold investment real estate, and was a part-time CFO for startups and growing small and medium sized businesses.