Natasha Goldstein is Founder & Managing Director of The Accountkeepers.
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Helpful, and brief, insights for financial leaders
by Natasha Goldstein
Hello wonderful colleagues, clients, and friends. First off, I’d like to highlight the amazing article InHerSight wrote about The Accountkeepers last week! Thank you to Ursula Mead and her amazing team. We are honored to be your partner in improving the workplace for women.
Now, onto the December Tip! This Tip has been at the top of my list for some time. It is the answer to a question I get asked all the time: “what’s the difference between a Bookkeeper, a Controller, and a CFO?" It's a great question.
For many leaders, the distinction between the Bookkeeper, Controller, and CFO is not so simple, and I can definitely relate. Not until I was responsible for running the day-to-day finances of a company did I fully understand the difference. As a recent graduate with a Business Degree in finance and accounting I didn't understand it; as an Investment Banker I didn't understand it; and probably not until I'd been a CFO for a good year did I really understand it.
The best description I’ve heard of this is that the Bookkeeper and Controller are historians, and the CFO looks to the future. Bookkeepers and Controllers ensure the bills are paid and the receivables are collected. They ensure all the historical financial information and transactions are accurately documented in the accounting system.
Bookkeepers can perform a wide range of tasks, from just managing Accounts Receivables and Accounts Payables (typically called a Clerk) to doing the work of a Full-Charge Bookkeeper. Full-Charge Bookkeepers can do all the work in the accounting file, including adjusting entries, closing the books, and financial statement preparation. The term "Bookkeeper" can describe many different positions. Two "Bookkeepers” can rarely be compared apples to apples.
Controllers traditionally will be employed by companies where there is also a Bookkeeper, and the Controller oversees all of their work. Controllers will often do the monthly close and financial statement preparation. They will typically keep an eye on near-term cash flow. They might also do the company's budgeting.
CFOs tend to be consumers of the “history” – the financial statements prepared by the Full-Charge Bookkeeper or Controller. CFOs will use this “history” to assess the financial health of the company, prepare budgets and financial projections, and manage long-term capital needs. CFOs usually lead fundraising for working capital needs (such as bank loans, lines of credit, and mortgages). They also tend to manage the relationship with lenders and bankers. Sometimes they manage all fundraising activities.
Of course, at smaller firms these roles are often blurred. Most firms with under $10 million of sales don't need all three of these roles. In many cases, Controllers will do the work of the Bookkeeper, or the CFO will do the work of the Controller. I personally wore the Controller hat in my two CFO roles because in both cases, I had a very strong Full-Charge Bookkeeper, and those firms weren't large enough to need both a CFO and Controller.
From The Accountkeepers' perspective, we can do everything a company needs that is "historical". We can manage all the bookkeeping work, including monthly close, adjusting entries, and financial statement preparation. We also manage operational tasks such as invoicing, bill pay, and payroll. Where we stop is the forward-looking work of the CFO. For that, I have a long list of fantastic Fractional CFO firms I can put our clients in touch with.
So, if you're not sure what your company needs, give us a call. We'd be happy to listen and advise you on the best way forward.
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by Natasha Goldstein
Hello wonderful colleagues, clients, and friends. I wanted to start our first official Tip with the answer to a question I get all the time: “should I outsource my bookkeeping”?
If you Google “Should I outsource my bookkeeping”, you’ll find a plethora of blog posts from our competitors trying to convince you that you should *always* outsource your bookkeeping. Along the same lines, most of our competitors have a long table on their website listing the attributes of a good Bookkeeper. Below their company name is an uninterrupted column of wonderful “√” marks, and below the "In-house Hire" is a solid column of the dreaded “x”. I don’t love those tables… There are certainly cases where an in-house Bookkeeper makes more sense, and I never want to lead a potential client down the wrong road.
First of all, let’s go over what you’re getting when you “outsource” your bookkeeping. There are many different types of outsourced bookkeeping services, and each fits a different type of company. You really can’t compare them apples to apples.
There are options that start at less than $100/ month, and options that start at $2,000+. For a hundred bucks you’ll often get one bank account reconciled on a cash basis (not accrual), you’ll get a virtual contact you can “chat” or email (no calls), and nothing beyond that is provided. Often, these services are good enough for individual consultants and sole proprietors with very simple, light accounting and no payroll.
The higher end services, such as those offered by The Accountkeepers, will manage all your accounting and financial statement preparation, no matter how complex, along with payroll, customer invoicing, and bill payment. They offer a face-to-face team that is highly skilled and available on-demand. Often, these services are just right for growing companies, firms with inventory, firms that manufacture products, firms receiving government grants, and non-profits, among others.
In all cases, outsourced bookkeeping services are usually off-site/ virtual.
So, when should you not outsource your bookkeeping? If your firm has these traits, I would strongly consider an in-house Bookkeeper:
Of course, many businesses and non-profits don’t have these needs, so hiring a Bookkeeper in-house is not required. For them, outsourcing offers many advantages. The biggest benefits I see for clients who are partnering with The Accountkeepers are:
So, as you can see, outsourcing the bookkeeping isn’t right for all businesses, but in many cases, it adds significant value and lowers costs. In either case, give us a call, and we can help you navigate the right decision for your company.