The Role of Bookkeepers, Controllers, and CFOs: Why You Need More than Just a Bookkeeper

 As a business owner, you've probably heard countless times that you "need a bookkeeper," or that "your bookkeeping needs improvement." Common complaints include inaccurate financial statements or delays in receiving them. But here’s the hard truth: a bookkeeper alone will not give you timely or accurate financials. Why? Because that’s not their expertise. 

Understanding What a Bookkeeper Actually Does 

Bookkeepers are crucial to keeping your financial records clean and organized. They ensure expenses are categorized correctly, revenue is placed in the right accounts, and that bank and credit card reconciliations are up to date. Their job is to manage the day-to-day transactional aspects of your business accounting. However, most bookkeepers don’t have an accounting degree and may not be formally trained in accounting. As a result, they can struggle with more complex accounting tasks. For instance, handling the balance sheet is an area where many bookkeepers fall short. Prepaid expenses, payroll liabilities, and insurance policies are all tricky areas. Bookkeepers may not understand how to allocate these properly, leading to under-recorded liabilities or inaccurate expense recognition. This is where the expertise of a controller becomes essential. 

Enter the Controller: 

A controller ensures that your financial statements—both the profit and loss (P&L) and the balance sheet—are accurate and timely. Unlike bookkeepers, controllers are well-versed in accounting principles and are responsible for closing the books each month. They make sure every general ledger account ties to a statement or schedule. 

Moreover, controllers are skilled at cash flow forecasting, budget management, and analyzing key financial metrics like gross margins. They can help you understand your fixed versus variable costs and break-even points, ensuring that your business operates efficiently and profitably. 

If your bookkeeper is doing a good job but you’re not getting the insights you need, a controller can layer on top of your existing team. You don’t need to let go of a trusted bookkeeper. Instead, a controller can guide them, ensuring they focus on what they’re best at while someone else manages the more advanced financial tasks.

So, Why Not Just Stick with a Bookkeeper? 

Cost is a significant factor for many small business owners. Bookkeepers are generally less expensive than controllers, so it may seem like a cost-saving strategy to rely on a bookkeeper for everything. But this can end up being a costly mistake. 

If a bookkeeper is responsible for preparing your financial statements and doesn’t fully understand the complexities of the balance sheet or cash flow, you could end up with inaccurate financials. Relying on these could hurt your relationship with banks, investors, or tax agencies, potentially leading to missed opportunities or costly errors. Inaccurate financials can cost far more in the long run than investing in proper oversight. 

Controllers, CFOs, and Strategic Planning

 If your company has grown beyond a certain point, you may also need a Chief Financial Officer (CFO). While a controller looks at historical data and ensures that your books are accurate, a CFO focuses on the future. They provide strategic planning and help you scale your business sustainably. 

A CFO works closely with the controller, using accurate financial data to make informed decisions about growth, profitability, and risk management. They also help with financial forecasting, budgeting, and ensuring that your company’s resources are being used effectively. 

Finding the Right Fit for Your Business 

If you’re unsure whether you need a bookkeeper, controller, or CFO, assess the complexity of your business’s financial needs. If you’ve outgrown simple bookkeeping, adding a controller or accounting manager might be the best next step. Bringing in a CFO could be the right move if you’re planning for significant growth or working on complex financial strategies. 

At the end of the day, having the right people at each level of your accounting department—whether it's a bookkeeper, controller, or CFO—ensures that your financials are accurate, timely, and help drive your business forward.