Accountant or CFO? What does my business need?
Accounting is focused on compliance and working in the present and past while finance is focused on the present and past to predict the future.
Think of your accountant as a passenger in the car and your CFO as the co-pilot who explains what is happening on the car dashboard and gives you advice on the best way forward while driving down the road. Your CFO helps you set the GPS destination and helps you navigate obstacles while on the road while discussing upcoming steps.
Accounting services include bookkeeping, payroll, accounts receivable and payables, tax filling and planning, and compliance work.
CFO services include financial planning and analysis, scenario planning, consulting and advisory services, financial strategy and risk management, business financial performance monitoring, cost analysis, KPI definition, and more.
A typical full-time CFO costs between $200K-$400K/yr + bonus + benefits. As a small business, fractional CFO services are accessible and affordable in comparison. In contrast, a $1M-$50M business can get a fractional CFO between $5K-$20K/mo on average to support the comprehensive financial function in a growing business.
As your business is getting started, the first function you will need is bookkeeping and tax filing services. Books have to be maintained monthly and provided to the accountant for tax time compliance. As your business grows, your accountant might not be able to answer your more complex money questions and that is when you need to hire a fractional CFO to support you in a more hands-on way. This normally starts to happen around $1M-$5M/year in revenue.
Your business will need a financial forecast plan for the year that helps define goals for the company and ensure financial clarity as you move forward. Those goals then become the measurement to ensure the business is performing in a healthy financial way during the year. As new decisions are made, the plan gets adjusted quarterly to reflect any changes. At the end of the year, we review financial performance and compare to previous year and budget to ensure we achieve the financial goals of the company or understand why they were not achieved. This allows you to better navigate data driven decision making in the business and takes the daily financial management off your plate as an owner/CEO.