It’s not uncommon to have difficulty differentiating between the main financial professionals. Not only are the names similar, but they are also often unintentionally used interchangeably. However, despite how the titles may be used colloquially, there are distinct differences in knowledge, background, and expertise between Bookkeepers, Accountants, CPAs, Controllers, and CFOs.
Why the Differences Between Financial Experts Matter
Your business financials are important. They keep your company in business, pay your employees, and fuel your growth and success. Making a mistake in hiring financial experts to manage your company’s finances—such as hiring someone underqualified to oversee financial strategy or overqualified for general account management—can mean mistakes, missed opportunities, and wasted time and money.
A good way to think about it is like this: you wouldn’t get the vehicle’s transmission replaced or your fuel injector repaired at a quick-lube shop. While there may be individuals there that might have knowledge about these repairs—and might charge less than a full-service mechanic—their expertise day-in and day-out is in quick lube, and hiring them for a more specialized, complicated repair can mean a greater risk and could lead to more expensive repairs down the road. Conversely, going to a high-performance specialty shop for an oil change or to refill your windshield wiper fluid would be effective but much more expensive.
Instead, car owners go to the shop that fits the needs and goals of their service as well as the complexity and performance of their vehicle—whether that’s a quick lube shop for basic oil changes for the family SUV or to a high-performance specialty mechanic for a racing import.
In business, the same differentiation holds true. It’s important to understand the differences between financial experts and their roles and responsibilities to determine which fit your financial needs and the current performance and complexity of your company. This way, when you need to make a financial hire, you can be confident that you are looking for the right kind of expert.
What are the Main Types of Financial Experts?
The most common professional financial experts are Bookkeepers, Accountants, CPAs, Controllers, and CFOs. While there are some skills and duties that overlap, each of these financial professionals have different levels of experience and education as well as specializing in different areas of expertise.
A bookkeeper is in charge of recording financial transactions and keeping the books up-to-date, as the title suggests. Bookkeepers are generally in charge of payroll, processing financial transactions, reconciling accounts, managing accounts receivable and accounts payable, and preparing initial financial statements. Bookkeepers typically have at least an associate’s or bachelor’s degree in accounting.
While an accountant is qualified to perform bookkeeping tasks, they’re generally more experienced in report preparation and interpretation than bookkeepers. Accountants typically have a bachelor’s degree in accounting. They’re typically experienced in bookkeeping, maintaining business accounts, and helping prepare simple tax returns.
While all CPAs are accountants, not all accountants are CPAs. CPAs have met specific state and education licensing requirements and passed the CPA exam. CPAs are considered fiduciaries to their clients, meaning they have a legal duty and power to act on behalf of and in the best interest of their clients. They’re also more experienced in tax code and strategy. In addition, only a CPA can prepare an audited or reviewed financial statement.
A financial controller oversees accounting allocations, reporting, and cash management. It’s wise to have a separation of duties between accountants and controllers so there is a checks and balances system. A controller is also in charge of the internal controls over accounting and financial systems. The controller will also likely oversee negotiating lines of credit and vendor agreements, as well as reviewing financial contracts. Lastly, the controller oversees the preparation of financial statements, as well as budgeting, budget-to-actuals, and basic financial projections.
The Chief Financial Officer, or CFO, should be as the name states the primary C-suite officer over all things financial. CFOs are high-level strategic experts.Unlike the previous roles that are “rear-facing,” meaning they are in charge of record-keeping and day-to-day finances, a CFO is forward facing. CFOs are experienced, high-level financial strategists. This senior executive oversees all financial actions and strategy within a company. While other financial roles are typically concerned with historical and present-day finances, a CFO is interested in the future. A CFO will analyze a company’s financial strengths and weaknesses, and will plan and execute strategies to maximize opportunities and positive outcomes. CFOs are also in charge of forecasting, systems (financial systems as well as operational systems, including costs and making sure every branch of the company is integrated into tracking and financial systems), troubleshooting challenges, or opportunities such as raising funds or M&As.
Financial Expert Roles & Responsibilities Breakdown
|Record & Classify Transactions||X|
|Interpret Financial Data||X||X|
|Board Meeting Presentations||X|
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About the Author
Jerry Vance is the founder and managing partner of Preferred CFO. With over 16 years of experience providing CFO consulting services to over 300 organizations, and 30 years in the financial industry, Jerry is one of the most experienced outsourced CFOs in the United States.
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