This is the third and final part in our series in getting your financial house in order. It may be a chicken and egg scenario of whether you develop a budget and key performance indicators (kpis) or if you need strong financial management or a financial management team in place first. When it comes to financial and accounting management there are a couple of different roles. There is the controller, who does the daily financial management and cash flow. They would typically be a super strong bookkeeper or oversee a team of bookkeepers and accountants. There is the Chief Financial Officer (CFO), who bridges the gap between numbers, strategy, and action.
At what stage does a company need a controller or CFO? The answer depends upon whether that is done in house or outsourced on a part-time. Typically, a company can utilize and afford a controller before they can a CFO. This is regardless of whether in house or outsourced. A controller can generate reports and ensure accurate accounting for an entity. They will make sure that you numbers are right and in the short term help you minimize cash flow issues. in general, a company may be able to afford and utilize an outsourced or virtual controller when they reach a couple hundred thousand dollars in revenue. Once they hit 10+MM in revenue they may want to consider looking at one in house.
A virtual or outsourced CFO can typically be engaged when a company approaches a couple of million dollars in revenue. At those levels, a CFO will provide you with the necessary return on your investment. What does the CFO do? He or she works in conjunction with the controller and business owner in order to make sure the financial house is in order, strategies are in place, and financial processes are efficient and streamlines. They can often help amp up growth by laying the foundation for future growth- in both processes and in setting up strategies for the future. Let us know if you have questions on financial management approaches are best for your business. The true answer is going to be specific to each business.