Small business owners often lack the resources to develop and manage a fully staffed accounting team. Nonetheless, small businesses — like all businesses — are still responsible for executing all of the core bookkeeping, accounting and financial functions essential to the enterprise. 

These range from taxes and compliance on the one end, to funding growth and making strategic financial decisions on the other end.

Although your business may not be ready to have multiple dedicated senior accounting roles for quite some time, it is still important to understand how these roles work. Doing so will allow you to make better decisions, plan job duties more clearly, and strengthen your accounting and financial operations as a whole.

The two most common titles at the senior level of an accounting team in the U.S. are the Controller and the Chief Financial Officer, or CFO.

The Controller role is best understood as the position responsible for supervising the accounting functions as a whole. The Controller’s job is to maintain and manage the books and records of the business, ensuring the accuracy of records and the precision of processes.

Common duties and responsibilities of the Controller include:

• Oversight of the accounting function
• Supervision of accounting personnel
• Preparation of management reports
• Preparation of financial statements
• Maintaining policies and procedures
• Preparing budgets and financial plans
• Preparing cash flow projections
• Overseeing and processing capital requests
• Implementing and maintaining performance measures
• Implementing and maintaining internal controls

It is important to understand the Controller function because every business needs to ensure that these tasks are achieved. Put another way, whether or not you hire or have a Controller, you need to act like you do, ensuring that your accounting operations are, indeed, in control.

Many small businesses struggle to reach that point — the point at which core accounting operations are in control – and therefore, this goal should be their first priority. Working with your CPA firm to develop systems, processes, procedures and stronger internal controls can help make this possible.

In addition to the Controller position, the next role on the senior accounting team is the Chief Financial Officer, or CFO. Whereas the Controller focuses on operational oversight and effectiveness, the CFO is primarily concerned with strategy, analysis and business direction.

Typical responsibilities for the CFO can include:

• Serving as a member of the executive team
• Performing financial analysis
• Formulating financial strategy, tax strategy and risk management strategy
• Leading interface with banks, lenders and financial institutions
• Supervising merger and acquisition activities
• Driving investor development and relations
• Ensuring ongoing profitability of the business and its holdings
• Directing audit and compliance activities (as applicable)
• Developing and interpreting management reports
• Determining cash flow and financial reporting assumptions
• Benchmarking the business against industry standards
• Establishing and managing the capital investment plan

In comparison with the Controller role, the CFO is focused on the forward view of the business (where we are going), whereas the Controller’s primary focus is on the rearward view (where we have been). Of course, you need a clear and accurate rearward view if you are to formulate a meaningful course of action for where you’re going.

For small business owners, this means that you need to control your accounting and financial operations tactically and consistently if you are to move forward with a clear financial strategy in the future.

Since most small businesses will likely not be hiring a dedicated CFO or even, in some cases, a dedicated Controller, the best approach to managing your bookkeeping and accounting may be to work with your CPA firm to develop a concrete accounting system with defined policies and procedures (the Controller function), and then ask your CPA firm to provide outsourced CFO services to provide strategic direction on a fractional basis.

Click here to learn more about outsourced CFO services from Haines & Lagerquist CPAs.

Image Credit: Maik Meid (Flickr @ Creative Commons)