When you start a business, money is tight. You’re usually investing your own savings to get the business off the ground, that you often look past getting sound structures in place when it comes to managing the finances of your business. It happens a lot, and here at Dexterous we see it all the time. New businesses become so focused on getting their product or service offering right, or their advertising and marketing strategies set up that they neglect their numbers.

Once these businesses start growing though, the importance of having a sound financial management in place is highlighted. Businesses then start to think – what do I need so that I can best understand my numbers to grow my business?

At this point, they start to look at all the different roles which make up a finance function. We are often asked questions such as; is a bookkeeper enough for my business? How is an accountant different to a bookkeeper, and what is a CFO and do I need one? We’ll address these questions below to help you gain a better understanding of the financial management team you need in place to best grow your business.

What is a bookkeeper?

A bookkeeper takes care of the day to day processing of your finances. These include tasks such as:

  • Sending invoices to customers
  • Chasing up debtors
  • Entering receipts and payments into your accounting software
  • Paying suppliers
  • Processing employee payroll
  • Reconciling accounts and preparing bank reconciliation reports
  • Calculating GST
  • Preparing Business Activity Statements
  • Extracting reports, such as Profit & Loss and Cash Flow Statements from your accounting software

What is an accountant?

Whilst an accountant can do the above tasks of a bookkeeper, there is a substantial difference in fees charged by a bookkeeper and an accountant. Accountants generally charge higher fees as they have additional qualifications; such as being a Tax Agent, CA/CPA/IPA qualified and therefore they can provide further services. Some tasks performed by accountants include:

  • Reviewing the structure of your business (e.g. sole trader, partnership, company, trust) and making recommendations
  • Reviewing work performed by the bookkeeper
  • Setting up your businesses financial reporting processes and structure/layout of key financial statements such as the Profit & Loss Statement and Balance Sheet
  • Preparing and lodging the business tax return
  • Preparing initial budgets for review by the CFO

What is a CFO?

A CFO (Chief Financial Officer) is key in providing financial management advice and setting the financial strategy for your business. They take the financial information prepared by the bookkeeper and the accountant, and then use this information to look forward. Key tasks performed by a CFO include:

  • Managing your financial operations and overseeing the bookkeeper and accountant
  • Setting the financial strategy and financial KPIs of your business in conjunction with other members of the management team
  • Setting the financial budget
  • Reviewing financial performance based on actual results to budget and making recommendations
  • Recommending new financial systems to improve the efficiency of your business
  • Reporting on the financial sustainability of the business
  • Recommending ways/areas to cut back on expenses and improve efficiencies

What do I need?

It is important to understand that a bookkeeper, accountant and CFO should never work independently. Their roles are entwined and at times do overlap. That is why at Dexterous, our team consists of bookkeepers, accountant and CFO’s. When a business starts on their growth phase, they should have all three roles in place;

  • the bookkeeper to record all day to day financial transactions,
  • the accountant to take care of tax and reporting obligations, and
  • the CFO to set the financial strategy and provide higher level insight.

It’s so important that your business has sound financial management in place so that you are best placed to make the very best decisions to continue on the grow trajectory for your business. Sound financial management requires the skill sets of these three different roles.

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