Tips No. 002: Bookkeeper, Controller, CFO - what's the difference?

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.