If you’re considering hiring a fractional CFO, it’s a good sign! It shows that your business is expanding and in need of more than just a bookkeeper. Bookkeepers are not bad people, and in some situations, it could be exactly what you need. However, fractional CFO’s have so much more mobility in their role and much more insight into your business than a bookkeeper does. You may be reading this because you want to know what the major differences are between a bookkeeper and a fractional CFO. Business owners often ask why one should be utilized over the other. Really, what the question should be is, “What qualifications should I be looking for when hiring a person to financially advise me?” Here are some questions to consider when bringing on your righthand financial person.
Does a Fractional CFO do Accounting and Budgeting?
Yes. When bringing a financial person on your team, you need to be able to trust someone to develop accurate and timely data as well as keep proper record of it. Monthly financial statements, tax reporting, KPI’s; you need someone to be equipped to take ownership of those numbers.
Not only does a fractional CFO take control of your financial records, they also clear up the ambiguity that your financials can be. This can help you establish key metrics. For example, fractional CFO’s can assess which products gross the most amount of revenue, acquire more customers and increase your profit margins.
In addition, your righthand financial person needs to oversee budgeting and have insight into the cashflow. A part time CFO can examine your cashflow and help articulate proper salaries, benefits, etc. Clarity Consulting even assists with the onboarding process of new employees. Book a free Clarity Call with us today to find out more!
Does a Fractional CFO do Financial Forecasting?
Absolutely! Accurate data is only as valuable as your ability to interpret it. A fractional CFO is able to take your data and use it to make predictions for your business. As they review your monthly budget, sales, and revenue, they’re able to see if there are any cliffs up ahead and make adjustments accordingly. They are able to zoom out, look at the bigger picture and tell you where your best chance for success is—what your strongest month is, what your strongest product is, thus helping you perpetuate tough financial calls. This frees up a ton of head space for you so you can focus on growth and forward moving activity.
Do you Get Support and Assistance with a Fractional CFO?
Yes. A part time CFO will want to establish a relationship with the owner and know what is troubling you, but also they will want to know what opportunities you see for growth. To keep your business on track, a fractional CFO will need to know the key issues your company is facing financially. Thus, the role of a part time CFO should be seen as a trusted business partner as they make data-driven decisions and push your company toward effective financial strategies. A fractional CFO does more than just record data, they drive growth and handle complex situations while controlling costs. Aside from reporting on financial performance, the fractional CFO can translate business strategy into financial strategies. Their acute ability to synergize strategy and finance empowers them to implement business plans and suggest healthy risks for your company. If you're in need of a business partner to help you make financial decisions, book a free Clarity Call with us today!
Can a Bookkeeper Fulfill the roles of a Fractional CFO?
A fractional CFO encompasses everything you need in a financial advisor while the roles of a bookkeeper are very limited. While bookkeepers can be great at entering data, and keeping your records up to date, there are many more essential services that a fractional CFO can provide to rapidly growing businesses. (For more information on fractional and part time CFO services, read our previous blog post on The Benefits of a Part Time CFO). Here’s the truth about bookkeepers.
They’re Good for Data Entry
The core of bookkeeping is data entry and coding, ensuring that the accounting system, spreadsheets and databases are populated with the correct data, coded to the right accounts so that bills can be paid and reports can be pulled. It involves tracking all income and expenses, paying bills, invoicing, tracking payroll, etc. Growth Force says that bookkeeping is essentially a data-entry function.
They Only Look at the Past
According to Kern Accounting, some bookkeepers understand basic accounting, others do not. I’ve found that there are numerous bookkeepers out there who “know”QuickBooks, but they don’t understand the accounting effect of what they are entering.
They don’t question what the numbers mean and are unable to interpret financial statements. They do not do financial forecasting. They simply present the numbers in a black and white way when really you need someone to be able to add some insight and color.
Fractional CFO vs. Bookkeeper Conclusion
To sum it up, a fractional CFO zooms out and looks at the bigger picture. They make sure that the systems and people are in place to produce accurate financial information. This frees up the business owner to make better decisions about their staff members, their products, and everyday logistics. While a bookkeeper looks at the past, a CFO looks to the future to help reach the company's goals.
Fractional CFO Services from Clarity Consulting
At Clarity Consulting, we know when one person doesn’t have a handle on all the areas, things fall through the cracks. Part time CFO services and fractional CFO programs can open up a whole new world of operational efficiency. We’ve worked with dozens of business owners to create a deeper understanding of their financials. Instead of confusing and boring excel spreadsheets, we help create a clear picture of current financials and financial forecasts.
In addition, we also provide administrative support for HR, insurance and taxes.
Clarity Consulting is there to help with the new employee onboarding process. We make sure they have filled out all their documents and get direct deposit set up. If there is ever a change in contact information throughout employment, Clarity Consulting changes it, freeing up the business owner to focus on growth.
We help companies with their annual General Liability and Worker’s Comp audits by gathering all the certificates throughout the year and sending the payroll report to your auditor.
We communicate with your CPA and make sure your CPA strategy is being implemented throughout the entire year.
If you’re a small business that looking for a partner to bring more leadership, communication, and experience, set up a free Clarity Call with us!
Becca Harper is the founder of Clarity Consulting.