What Is the Difference Between Bookkeeper, Controller, and a CFO?

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Financial operations are the backbone of any business, even a not-for-profit company. As your business grows, managing money becomes more complex. Reporting transactions and managing the money of a small store is time-consuming. Imagine managing the finances of five or 50 stores where hundreds of transactions happen daily.

Financial management has several roles, from bookkeeping to financial statements, management accounting and reporting, budgeting and projections, fundraising, taxation, and capital structure. All these duties are well divided into a proper hierarchy of bookkeeping and accountancy, controller, and chief financial officer (CFO). While the smallest of the businesses need a bookkeeper, the need for a controller and a CFO depends on the level of financial transactions of an organization.

In this article, we will understand the roles of bookkeeper, controller, and CFO and whether your business needs their services.

The Role of a Bookkeeper and Accountant

The beginning of finance happens with bookkeeping. Hence, every business needs a bookkeeper from Day 1 of starting the business.

A bookkeeper is responsible for correctly populating all the financial transactions and filing the supporting documents. From sending invoices to making payments to employees and suppliers to purchases and withdrawals, every transaction has a corresponding ledger entry. The bookkeeper is responsible for managing accounts receivable and payable.

The accountant reconciles these journal and ledger entries with bank statements to ensure no transaction is left behind. The accountant then prepares financial statements showing the company’s current financial position (cash flows, profits, debts, and cash reserves) to the management. Bookkeepers are responsible for keeping the ledger entries up-to-date and accurate.

The Role of a Controller

A financial controller controls the financial transactions, cash flows and financial reports. The controller reconciles the invoices and analyses the financial statements to find gaps, forecast short-term cash requirements, and prepare and maintain the budget.

The controller prepares daily, weekly, and monthly financial reports to gauge the deviation from the budget and cash flow. They are also responsible for preparing an accounts receivable system and paying all invoices. If there are any delays, there is a proper follow-up. The controller is responsible for selecting and maintaining financial software per the company’s requirements.

In smaller companies, the bookkeeper also performs the role of controller. A midsized company hires a dedicated controller. These roles are separated in a more significant organization to ensure a single person doesn’t have complete control of the financial transactions.

The Role of a CFO

The duties of a CFO go beyond those of a controller and are more strategic. The CFO oversees the financial reports prepared by the controller to assess the current financial situation and plan for the future. They then use this data to formulate financial strategies, such as securing funding, maintaining an optimal capital structure of debt and equity, and ensuring all activities comply with financial regulations.

The CFO works with the CEO to implement long-term business, tax, and risk strategies. The former prepares a long-term financial roadmap and deals with investors, the Canada Revenue Agency (CRA), and banks. A CFO’s objective is to ensure sufficient liquidity to sustain crisis and fund growth opportunities while giving positive returns to shareholders.

The CFO handles the financial aspects of major business strategies, such as mergers and acquisitions, initial public offerings, and business expansion.

Difference Between a Bookkeeper, Controller, and a CFO

There is a clear distinction in the level of expertise of a bookkeeper, controller, and CFO and what they bring to the table. While a bookkeeper’s role is more transactional, that of a controller is managerial, and that of a CFO is strategic.

All these roles are relevant, as it is imperative to have a different person record and check the transaction to ensure the accounting system is solid and reduce the risk of errors and scams.

While there is no hard and fast rule on which company needs which service, a controller and a CFO are generally hired by bigger companies as their services are expensive. Small businesses can hire an outsourced controller or CFO services depending on their financial situation. These professionals have experience across industries, having worked with different clients, and can assist you in bringing your finances on track.

Contact Edelkoort Smethurst CPAs LLP in Burlington to Help You with Your Financial Management Needs

Talk to a professional CFO to help you manage your short and long-term financial situation. To learn more about how Edelkoort Smethurst CPAs LLP can provide you with the best financial management expertise, contact us online or by telephone at 905-517-2297.