Bookkeeper, Financial Controller and CFO Services Explained

Written by Stephen Beard, Managing Director of Plyo Bookkeeping, a Vancouver-based bookkeeping firm.

Types of outsourced accounting service

This article is aimed at small business owners who are trying to figure out what level of accounting service they need to hire and pay for when outsourcing their finance department. Accounting and consulting firms often categorize and rank their services using the job titles you would find in a larger finance department. These would usually be Bookkeeper, Financial Controller (FC) and Chief Financial Officer (CFO). In a traditional finance department, a Financial Controller is considered more senior than a Bookkeeper, but less senior than a CFO. Hence, outsourced Bookkeepers charge the least and CFO services charge the most.

Outsourced Accounting Services Explained

For small businesses, Bookkeepers can do more than bookkeeping

While the job titles of Bookkeeper, Financial Controller and CFO have clearly defined roles and tasks in a much larger organisation with a sizeable finance team, the lines become far more blurred in a smaller organisation.
For example, in a large multinational company, decisions on how to set up the financial system would likely need input from both the Financial Controller and CFO – but in a much smaller business these set up tasks may be very straightforward and could easily be managed by a competent bookkeeper. You don’t need to pay a CFO to set up your bookkeeping system if you’re a small service business, but you may need someone with higher level skills if you’re a fintech company looking to set up a financial system that can scale up to deal with a large volume of transactions. Understanding what your business needs will help you only pay for the services you require, and will help you avoid paying Financial Controller and CFO rates for jobs that your bookkeeper should be able to perform.

Below I’ll outline the tasks performed by an outsourced Bookkeeper, Financial Controller and CFO for a small business, which I’ll define as one which doesn’t require a full-time finance staff member.

Outsourced bookkeeping tasks:

  • Setting up your accounting system. Unless your business is unusually complex, you should expect your bookkeeper to be able to do this
  • Record keeping
  • Bank reconciliations
  • Raising customer sales invoices
  • Entering purchase invoices
  • Payroll processing
  • Basic financial report preparation. Modern accounting software will automatically produce a Profit & Loss statement and a Balance Sheet once the books are complete. Your bookkeeper should be able to walk you through these statements and help you understand the health of your business. If your business requires more detailed financial reports where adjustments need to be posted, then this would be a Financial Controller service (see the Financial Controller section for details).

Outsourced Financial Controller Services:

  • Managing payment of your suppliers. For an outsourced firm to handle your supplier payments, they must be able to access your bank account. This can be managed securely, but the additional security around handling client money safely makes this a more premium outsourced service.
  • Managing collection of customer invoices. This may involve a multi-step escalation process should there be any bad debt that needs chasing, making this a more premium service.  
  • Advanced financial reporting. It may be that you need more than just an unadjusted monthly profit and loss statement (P&L) to help you run your business. A Financial Controller would be able to prepare a P&L on an accrual basis (essential for some businesses) and could also prepare more complex financial reports that might combine data from other systems, such as your point-of-sale system or your marketing platform.  

Outsourced CFO Services:

  • Financial modelling may be required if your business is looking to raise money, needs to carefully assess its long-term cash flow or requires detailed budgets to help keep departments and staff focused on the bottom line. If you need someone to help build a financial model, then it’s important to understand that not all CFOs will be equally well placed to help your business. Models require assumptions and estimates, and a CFO who’s worked in your industry will already know industry standard benchmarks and KPIs – which are essential for a realistic model.
  • Cost reviews can be an essential exercise, especially if you’re working with a CFO who has a detailed knowledge of your industry. However, if your CFO doesn’t have a background in your industry, then it’s much less likely that they’ll be able to quickly identify areas of overspend. As for financial modelling, industry specific knowledge is the most important thing to look for.
  • Strategic advice is a broad category, and again a CFO with industry specific knowledge will be worth their weight in gold. Having said that, any good CFO should be able to help you refine your business strategy, as well as hold you accountable to it.
  • CFOs may also help on specific events, such as mergers and acquisitions or presentations to Venture Capital firms.  

Conclusion:

For most small businesses, a bookkeeper should have the required skills to set up and run the accounting system. They should also be able to provide basic financial reports, and they should be able to help you interpret these.

If you want your outsourced finance team to also manage supplier and customer payments, then you’ll need to pay for additional premium services – often called financial controller services.

If you require detailed financial modelling, then you’ll need a CFO level service. When outsourcing your accounting department it’s essential that you’re not paying a CFO to do your books or any other lower-level services. Make sure that you get a detailed breakdown of the services provided when paying for Financial Controller and CFO services – as you should only be paying bookkeeping rates for bookkeeping work, which for a small business often constitutes the majority of the accounting work.

If you’re still unsure about what outsourced financial services you need, Plyo Bookkeeping offers all three levels of service and we’d be happy to jump on a call and provide a free consultation.

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