What’s the Difference Between a Bookkeeper, Accountant, Controller and CFO?
Of all the core business processes, accounting is perhaps the most puzzling (unless you’re an accountant, of course). The problem starts with the titles themselves. How is bookkeeping different from accounting? Does my business need a controller? What does a CFO do? Keep reading for these answers and more.
Bookkeeping refers to the process of recording and categorizing a company’s business transactions. Depending on the size and complexity of the company—and the skill and experience of the bookkeeper—specific roles beyond “keeping the books” might include managing bank reconciliations, creating simple financial statements, paying bills, issuing invoices and collecting customer payments.
Every business needs someone, whether an employee or an outsourced partner, who is responsible for bookkeeping activities on a daily basis.
Accounting takes bookkeeping a step further. An accountant is responsible for interpreting, analyzing, summarizing and reporting the financials for a company, usually on a monthly, quarterly and annual basis. In keeping a finger on the pulse of your company’s financials, an accountant becomes an essential growth partner, helping you glean relevant insights from your financial data that can drive growth. Accountants also can identify and help correct issues with cash flow, inventory management and pricing, advise you on taxes (and can even help prepare tax returns), perform audits and handle payroll.
A controller (or comptroller, if you’re in a government agency or non-profit organization) oversees all accounting and bookkeeping operations, creating accounting policies and procedures and ensuring they’re in compliance with local, state and federal laws. In other words, they make sure everything is done correctly.
Not all companies need a full-time controller, and some companies may never even require the services of a controller (especially if they have an experienced accountant with advanced technical expertise). In general, controllers come in handy when business—and by extension, accounting—has grown in complexity. Circumstances that could merit a controller include adding service lines, opening new locations, making substantial capital investments, going public, seeking outside investors and undergoing an audit, whether internal or external.
When you need strategic financial direction for your company, it can be helpful to call on a CFO, or chief financial officer. Strategic decisions that merit the involvement of a CFO include raising capital, securing credit, performing a market analysis, and selling or acquiring a business. When you company grows to a specific size, bringing on a CFO can also alleviate some of the pressures on a CEO.
A CFO can stand in place of a controller, providing both oversight of day-to-day operations as well as forward-looking strategic direction. If the operation is complex enough to merit both positions, a CFO also can work with a controller.
A variety of factors determines who needs to be on your accounting team and when. XMI can help you understand your specific company’s accounting needs. What’s more, as your outsourced accounting and finance partner, XMI can provide you an entire spectrum of support, from bookkeeping all the way up to fractional CFO services. Get in touch at 615-248-9255.