Many of our conversations are with ambitious business owners seeking advice and guidance to help them crush their financials goals. Taking a step back their business might be too small to afford a full-time CFO so they use the services of a more traditional accounting firm or bookkeeper. They have big goals to grow revenue, increase margins, take market share, or even buy out their competitors. Perhaps they need help with securing financing or improving their cash flow. If only they could have a trusted finance advisor to help guide them on this journey?
Business owners will frequently ask “What is the difference between traditional accounting vs CFO Services?” While there is overlap between the two, the skill sets that accountants and CFOs possess are drastically different. To better understand how each of the services can improve your business and crush those goals, it is important to differentiate the responsibilities between the two. The below is a summary of the key distinctions separating a CFO from an accountant.
- Forward Looking – Accountants generally focus on tracking, recording, and reporting transactions that have already occurred. A CFO on the other hand can help plan for the future, helping you anticipate potential challenges and opportunities that may arise. The progress you make against those goals will be closely monitored, so you can capitalize on opportunities or navigate challenges to mitigate losses. Even for growing firms who have already identified these opportunities, a frequently overlooked aspect is the capacity constraints that companies often encounter during periods of expansion. CFOs have the expertise to get ahead of these issues and keep you on track for your growth plan.
- More Holistic Approach – Accountants often specialize in a particular area, such as financial reporting, bookkeeping, or taxes. CFOs, however, take a more holistic approach when analyzing a your financials. They will take the time to gain a deeper understanding of all aspects of a company’s operations, the key profit drivers, look at the accounting, taxes, cash flow, assets, and debt all in one view. This integration across various areas enables the identification of many opportunities for optimization. For example, being able to estimate taxes and strategizing ways to safeguard your wealth or help your money grow.
- Financing and Cash Flow – Your cash flow and use of debt/leverage is critical to any business. A CFO has a keen interest and razor sharp focus on helping you improve cash flow, manage your cash resources, and work proactively with your lenders to help optimize your debt situation. You might need an emergency fund, access to funding for expansion, or just want funds to buy out your competition having a CFO in your corner helps guide you along that path.
- Ongoing actionable advice – Accountants are largely focused on compliance and ensuring that a business meets their legal and tax obligations. While they produce excellent work, you will often meet just once a year for them to provide your tax bill, sign your returns, and a year-end report that may be difficult to apply without financial expertise. CFO’s are involved with a company on an ongoing basis, allowing them to understand you and your business while speaking in a language easily accessible to business owners. This way, complex real-time financial data can be used and simplified to deliver clear actionable insights, that can be used to better understand your business and stay on course towards your goals.
CFOs can provide a variety of expertise to help you grow your business. Given their extensive responsibilities, many mistakenly believe that CFO services are only necessary and possible for large companies who have a large in-house budget. At Finalyze we are pleased to offer a Monthly CFO Service encompassing your advisory, finance, accounting, and tax needs in one convenient monthly fixed fee plan. Our services is designed for business owners looking to crush those goals. Learn more about our Monthly CFO Service and book a complimentary consultation.