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This article compares and contrasts the responsibilities of a CFO versus a Controller, Accountant or Bookkeeper. Many business owners do not perceive the divergences among the roles and the value a CFO may fetch to the business. Additionally, a good deal of business owners do not feel they may afford a CFO, nevertheless that is where a percentage time CFO who participates with the business proprietor and management is critical. A share time CFO may spend as little as a day or two month with the business and add value to the bottom line. A. CFO Responsibilities: 1. Cash Management Cash management includes understanding your business’s “operating cycle” (i.e. cash to cash cycle). To improve your “operating cycle” it is of the utmost importance you grasp what it means, how to calculate it, and what influences it before you may improve it. Cash expected values your cash remainder to be in 6 months?” Most of the time companies are fighting cash flow troubles today and can’t think regarding the future past this week. Forecasting and managing cash flow provide a real sense of control over the business. Implement a Cashboard-Dashboard, 13 week cash flow forecast and review cash flow reports at least monthly. The key for any business is to focus on cash, not just EBITDA and Net Income, as Cash is King! 2. General Financial Sophistication • A sounding board for the proprietor in making key decisions, as the Trusted Advisor 3. Budgeting The ongoing procedure of developing, implementing and reviewing the budget and it is related variances to actual results. The CFO helps correlate the operations and financial results of the business so the management team perceive the financial affect of the conclusions they make. 4. Compliance The ongoing procedure of keeping in compliance with bank, capitalist covenants, tax versus management reporting working papers, insurance, corporate minutes. 5. Financial Oversight and Management Analyze and review on a monthly basis P&Ls and Balance Sheet and Cash Flows with the board and management team. Look at the story behind the numbers, not just the numbers. Drive toward data-driven decision making. Monitor key business metrics using a dashboard which gives you the critical stats in the areas necessitated to monitor working capital. For instance, each month a report is produced showing data such as aged receivables, receivable days, inventory levels by category, inventory turnover, and days in payables. These stats will have to be looked at and equated month by month to determine if the problem is getting better or worse. Trending and related analysis and decision making is a key CFO function. Action must be taken without delay when the numbers show a trend that will be bad for the company. Oversee the activities, work and quality of the Controller/Accountant/Bookkeeper. Working capital and treasury management. Overseeing CPA relationship, business lawyer relationship. Working capital planning and forecasting. A simple Cashboard-Dashboard report will focus management in the right areas, and help to move the business into more inviolable cash performance. Review financial reports before sending to investors or any other external party. 6. Key Ratios Track and make an analyzation of key financial ratios versus industry standard benchmarks. Put plans in place to exceed sure industry ratios, or make conclusions to not meet sure ones, to meet others, and to exceed others. 7. Profitability Gross margin analysis by product line, merchandise or client is critical for little businesses. Migrate towards having the internal systems provide info to manage gross boundary line for product lines and products. 8. Processes and Systems Design, utilise and maintain accounting processes and procedures. Processes, whether documented or not, subsist in all businesses. It is the way staff carry out the work necessary to manufacture merchandise or services. In most little businesses, the underlying processes to accomplish the work are seldom documented or reviewed as a whole (i.e. system). Developing effective and effective systems and processes in general reduce costs and/or improve productivity. In businesses where there is a planned exit or merger or sale of the company, documented processes are critical so the buyer gets more value from the company, and the investor/buyer does not have to these things themselves. This goes beyond just the financial area of the company to operations, sales, marketing, technology, HR and all areas of the company. The more these procedure areas are to a complete degree documented, the higher the value of the company. 9. Internal Controls Structure, work and authority flows. Theft avoidance, cash tracking, accounting processes that limit access. Internal control procedures reduce routine variation, leading to more predictable outcomes. Focus is on effectiveness and efficacy of operations, reliability of financial reporting, and compliance with laws and regulations. 10. Strategic Planning As a company grows towards an exit/liquidation event, a strategic planning routine is essential. This is not as much a document, but more an ongoing routine to make an analyzation of and describe the strategic goals and tactical implementation. Parts of the strategic plan include: SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis, idealisti client profile, competitory analysis, short and long term action plans. The CFO guides the business through the preparation for an exit system in order to maximize enterprise value. 11. Corporate Credit and Collection Establish and improve corporate credit standing. Separate personal from business credit reporting so the company’s credit stands on it is own following the seven steps to success in constructing business credit. 12. Audits Oversee external accounting and other audits as required. 13. Information Systems Oversee the continued betterment of internal operations for selective information systems. Well documented IT systems, software and hardware asset tracking are key constituents when a buyer completes IT M&A due diligence for to a company that wants to be sold. 14. Financing Direct the business in the development of an effective capital structure by securing debt financing at beautiful terms, managing the lender relationships and ensuring compliance to the debt terms. B. Controller/Accountant/Bookkeeper Responsibilities: 1. Main Responsibilities The main responsibilities of of the Controller/Accountant/Bookkeeper are to maintain and operate the books and records of the business. Prepare, control, remainder and check respective accounts using general bookkeeping methods. Enter daily/weekly/monthly financial dealings in QuickBooks or other accounting software. Maintain ordinary ledgers recording the status of respective accounts and make sure that all the accounts balance. Prepare financial statements. Verify the accuracy of computerized accounting and record-keeping systems. *Accounts Payable 2. Standard Operating Procedures (SOP) Under the guidance of the CFO, document the accounting and bookkeeping standard operating procedures manual. Help the CFO give rise to the full accounting procedure documentation, review for improvements, and update the routine to increase streamlined accounting/bookkeeping processes. 3. Compliance Maintain best exercises accounting and bookkeeping in compliance with General Accepted Accounting Principals (GAAP). C. Conclusion: There is a substantial strategic and tactical divergence among the value a CFO brings to the executive leadership of a business and Controller, Accountant or Bookkeeper. The key is for the CEO/business owner/entrepreneur to schedule an basi meeting with a CFO, access the business need, and determine an action plan to drive the business to the next level of sales and profit. As cited in the introduction, most little businesses cannot afford a full time CFO, so a share time or virtual CFO is the idealisti arrangement. The key is find a CFO with experience that may be the Trusted Advisor to the CEO/business owner/entrepreneur and provide financial, operational and business insights.
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