How Is a CFO Different Than a Bookkeeper or Accountant?

Keeping financial records for a company is a complex process involving many steps. In larger companies, these steps are separated into different roles and responsibilities, such as a bookkeeper, an accountant, and a Chief Financial Officer (CFO).

Smaller businesses may not have the need for – or the resources to hire – full-time staff to fill each individual role. However, it is important for every business owner to understand the difference between these roles so they can access the right skills as they grow.

Bookkeepers

A bookkeeper is in charge of day-to-day accounting tasks such as paying bills, posting accounts receivables, performing bank reconciliations, and issuing 1099s. They are responsible for entering and coding financial data in the company’s bookkeeping or financial management system. Bookkeeping does not require any special designation, degree or testing, but accuracy and efficiency are essential strengths.

Accountants

An accountant tends to focus on tax and audit work. Businesses typically work with  Certified Public Accountants, or CPAs, on a consulting basis and often rely on them for  strategic advice. Some CPAs offer CFO services, but a CPA usually lacks the depth of strategic finance experience of a CFO – while a CFO will not have the CPA’s expertise when it comes to taxes.

CFOs

The CFO is the highest position related to a company’s financial activities. The CFO focuses on the overall financial health and direction of the business, and is responsible for financial planning and management, monitoring cash flow, cutting costs, and growing revenue. Their day-to-day duties may include developing financial KPI’s for the business, market and competitor analysis, developing and maintaining relationships with banks and shareholders, financial risk assessment, fundraising, and financial projections.

Depending on the size and structure of the business, the CFO may oversee an accounting or finance department tasked with providing accurate numbers for use in forecasting and budgeting strategy.

The CFO is often the final step in the process of producing the company’s monthly financials, reviewing the books with an eye for drawing strategic conclusions about past performance and the future direction of the business. CFOs think beyond financial accounting, evaluating the potential impact of economic and market trends as they work to direct the business in a profitable way.