Bookkeeper vs. Controller vs. CFO: When Does Your Business Need Each One
Business finances evolve as they grow and working with a professional often ends with a decision of choosing a bookkeeper vs. controller vs. CFO. Often, the progression goes from bookkeeper and ends at a CFO, but they all serve a different purpose depending on the stage of your company.
Knowing which professional you need at each stage helps you:
- Save money
- Prevent financial mistakes
- Make smarter financial decisions
Below, you’ll find the difference between bookkeepers, controllers and CFOs so that you know which fits your business now and in the future as it grows.
Keeping Your Books Accurate With a Bookkeeper
Bookkeepers are the foundation of your financial operations. The job of a bookkeeper is to record your transactions, track income and expenses, reconcile bank accounts, categorize spending and keep your financial data clean and up to date.
Your bookkeeper is the person who can answer the question, “What happened financially in my business this month?”
Some of the many tasks that these experts handle are:
- Producing basic financial reports (like a P&L or balance sheet)
- Reconciling bank and credit card statements
- Managing accounts payable and receivable
- Recording day-to-day transactions
- Running payroll
When You Need a Bookkeeper
If you think you need a bookkeeper, then you likely do. Many business owners manage their own books to start while trying to grow their revenue, but you lose much of your valuable time to reconciling receipts and maintaining accurate expenses. This is time you could be spending on other areas of operations.
You should consider hiring a bookkeeper when you have any of the below:
- Steady revenue
- Employees on the payroll
- Transaction volumes where manual bookkeeping becomes unreliable
Out of a bookkeeper vs. controller or CFO, these professionals are often the most cost-effective. Hire one part- or full-time or use an outsourced service to leverage their expertise.
Managing Financial Systems with a Controller
Controllers sit above bookkeepers, but they also work together. Bookkeepers record what happens while controllers ensure that all of the numbers are correct, consistent and compliant. Your controller will:
- Oversee accounting functions
- Implement internal controls
- Manage month-end close processes
- Create in-depth financial reports
A controller handles multiple areas: reviewing and approving the bookkeeper’s work, ensuring compliance with accounting standards (GAAP), managing month-end and year-end close, preparing detailed financial statements, overseeing tax preparation coordination with your CPA and building internal controls to prevent fraud or errors.
When You Need a Controller
A controller becomes essential once your business grows in complexity, such as developing multiple revenue streams, inventory, multiple bank accounts, investors or a growing team. If you find that your financial reports are inconsistent, your close process takes too long, or you need someone to make sure the accounting is done correctly, a controller is the right hire.
Many businesses reach this stage somewhere between $1 million and $5 million in revenue, though it varies by industry and complexity.
Strategic Financial Leadership with a CFO
A Chief Financial Officer (CFO) operates at the highest level of financial strategy. While bookkeepers and controllers focus on accuracy and compliance, a CFO focuses on the future: forecasting, fundraising, profitability strategy and high-level decision-making. A CFO translates financial data into business strategies.
CFOs typically handle:
- Pricing and profitability strategy
- Fundraising and investor relations
- Financial forecasting and modeling
- Mergers, acquisitions or exit planning
- Cash flow strategy and capital planning
- Advising the CEO and leadership team on financial decisions
When You Need a CFO
Not every business needs a full-time CFO, and some never will. CFOs become valuable when a business is scaling quickly, raising capital, considering an acquisition or navigating complex financial decisions that affect long-term strategy. This is often the case for businesses in the $5 million-plus revenue range, though fast-growing startups sometimes need CFO-level strategy much earlier, especially if they’re raising venture capital.
If a full-time CFO isn’t in the budget, a fractional or outsourced CFO can provide strategic guidance on a part-time basis, which is often the right move for growing businesses that aren’t yet ready for a full-time hire.
A bookkeeper vs. controller vs. CFO comes down to your business’s current growth and stage. Bookkeepers are crucial during your formative years, but when a controller is added as financial complexities rise.
CFOs are put in place when you need financial leadership.
Businesses will not hire all of these professionals at once, as each fits into the long-term strategy as the company grows. Evaluate your company’s current financial challenges to determine what expert would benefit you the most at this stage in your business.
Schedule a consultation to see how we can help you with your choice of a bookkeeper vs. controller vs. CFO.
