BOOKKEEPER vs ACCOUNTANT vs OUTSOURCED CFO
Every business, no matter what size, needs an accounting and finance function. This function is usually determined by the size of the business and the complexity of its finances. Most SMEs choose to outsource the whole or part of their accounting and finance services. The confusion for some businesses often comes in when they have to decide on the roles that they require the outsourced team to play. Like any other profession, finance has various roles. You as an entrepreneur must understand these roles so that you can make the right decision when deciding on the right team to outsource for your business.
Various roles in SME Accounting and Finance
Finance roles differ depending on the level of education and experience. In the beginning stages of the business, you’ll want to have a bookkeeper and an accountant. We often see SMEs that perform their finance administration (record-keeping) internally but outsource bookkeeping and accounting. As the business grows, decisions tend to revolve from just accounting towards financing and forecasting. This is when you need more than an accountant, you need an outsourced CFO in the business as they focus more on advisory services. Let’s look at these different roles.
1) Financial Administrator
This role is focused on data management. This person will keep all financial records and ensure that these are submitted to the bookkeepers or accountants. Financial administration is typically done internally with guidance from accountants. This role only requires administration capabilities and not necessarily an accounting background.
This is an entry-level role in accounting for your business. Bookkeepers focus on your business’ daily accounting tasks. They record and monitor your business’ financial transactions including debtors, creditors, cash flows, and payroll. They reconcile bank statements and will keep your records up to date. Once completed with their task, bookkeepers handover to an accountant. Bookkeepers need to have some accounting-related qualifications and experience as they work with accounting transactions and systems.
An accountant will be the person who handles all your businesses financial reporting and compliance needs. They review the work performed by bookkeepers (or sometimes do the bookkeeping themselves), handling more complex accounting, perform payroll functions, manage your debtors and creditors, prepare your monthly management accounts, prepare AFS and handle tax compliance matters in the business.
4) Outsourced CFO
It is surprising how many entrepreneurs hire accountants, believing they will get CFO activities. Whilst accountants are great for keeping the business finances up to date and making sure that there are no issues with SARS, they rarely focus on the future of the business. All SMEs need a CFO (Chief Financial Officer) to provide advanced advisory services, however, these individuals come at a steep price for businesses. SMEs can still access CFO services at a fraction of the cost of firms that offer outsourced CFO services. These are individuals who have the expertise of a highly-reputed CFO that you can use only when required. CFOs use the information provided by accountants to assist your business to grow and plan for the future. The role includes assisting the business with forecasting, budgeting, resolving cash flow issues, identifying and monitoring KPIs, advising on finance systems, assisting in capital raising, etc. This role is performed by highly qualified and experienced accountants such as Charted Accountants or CIMA qualified professionals. Most accounting firms offer these services for an additional charge to normal retainer services.
Where do Auditors fit in?
Auditors are independent accountants (not the accountants that prepare your AFS) who perform a detailed examination of a company’s financial records and express an audit opinion on the accuracy of the AFS. Its rarely required for a small business to have audited AFS, but if it does, then you will be required to hire an independent firm to go through your AFS and issue an audit report. You can read more on that here.
When deciding on who to outsource your accounting and finance function from, first determine the needs of your business and the different professional roles that you require. Make sure that the firm you are outsourcing from can meet your needs. The Accounting Village has a team of various accounting and finance professionals to meet all your needs. Feel free to contact us here to discuss your business’s requirements.