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What is the Difference Between an Outsourced CFO vs Accountant?

Let’s talk about a CFO vs Accountant. Most people are going to be wanting to do monthly recurring outsource CFO services. Here’s the way you need to think about that versus if you’re doing bookkeeping, if you’re doing accounting, if you’re doing AP/AR… I like to think about monthly recurring in four different tiers. First tier is going to be what I call sub-account management. That’s really going to be AP/AR, fixed assets, inventory, all the work associated with this. Now they might not be aware of what’s being done. They should be aware of what’s being done. They should have an understanding of it, they should know who’s doing it and how they’re doing it.

But they’re probably not going to be doing the work, they’re probably not going to be reconciling inventory at the end of the month. The second thing is monthly accounting services. Now monthly accounting is really about reconciliations. I’m also thinking about the month end close. So, reconciliations and the month end close. You might be saying, “Andrew, how did you come up with all this? Where did you see all this stuff?” This is not the opinion of Andrew. I’m simply telling you what I’ve learned from my research. I probably talked with 4,000 individuals in the USA and probably 13 or 14 other countries that have a small business accounting firm, a small business tax firm.

This is not my opinion. This is simply what I’ve observed through that unbelievably excruciating research of doing 4,000 interviews with people that are running small business accounting firms. CFO vs accountant: So, sub-account management, monthly accounting. Then the next one on here is outsource controller services. What’s the difference between controller and CFO services? When I see people providing outsource controller services, and many of you might on here want to be providing outsource controller services, an outsource controller is someone who’s typically dealing with complicated accounting stuff, right? So, you might be doing accrual accounting, right? Not everybody needs to do accrual accounting. They just changed the rules with the tax cuts and jobs act as to what level you can be at. Now, before you have to do accrual accounting for tax purposes, but some people want to do accrual accounting cause it’s a better way to run the business, gives them better information. Some people were on cash and accrual parallel, that can be more complicated. 

So point is this, accrual accounting is a great example. If you’ve got foreign currencies, if you’ve got a ton of intercompany transactions, if you’ve got a consolidation, something where you know there’s some complex accounting that’s getting done and we need somebody that’s super sharp, super technical, you’re going to take a little bit more time…that is different from someone that’s an outsource CFO. Now again, people can call themselves an outsource CFO. 

Sometimes people will be providing monthly accounting, but they’ll call themselves an outsource CFO.  I’m going to define this in in a vague way, but I’m going to give you some examples of this here in a second of companies or industries that you’re working with where I think I could be an outsourced CFO with this client I’m currently providing these types of services. How would Andrew think about helping that company as a CFO? 

If you have an example of a client right now or a prospect, and what industry they’re in, go ahead and paste it in here and I’ll give you some examples of how we might be able to help them as an outsourced CFO. So, let’s go and get those pasted in while I talk about what it means to be a CFO. A CFO is someone that is specifically driving more value to the enterprise, which means what I was talking about earlier, there is some tangible benefit.

There’s an increase in sales. There’s an increase in margins. There’s a decrease in expenses. There is an increase in cash flow. There is an increase in the business valuation. There is some increased value tangible. So, just because some of these things are being done, they have to get done. They’re compliance oriented many times or they’re administrative oriented. Many times some of these things are done by an admin. Sometimes not even an accountant, but when you’re a CFO you have to ask yourself the question, not am I doing accounting work? 

We don’t want to be doing accounting work. Think about this. One thing I want to hit on here is that it’s important when you make the jump to doing this type of work. I’m going to talk about this in a couple of different ways that you don’t just think about doing stuff to help them. The person that’s at this level does not do stuff. I’m going to use that term. Do stuff, right. It’s a very technical term. Do stuff. They don’t do stuff. They do things that are worth doing. That’s a big distinction. There’s a lot of things that need to get done when you talk about accounting, and I see some examples that I’m going to be talking about here in a second.

There’s a lot of things that need to get done when we talk about accounting, but there’s not a lot of things that are worth doing. There’s not a lot of things that are going to make a tangible economic difference in the value of the company, right? What I typically like to think about, if you actually put down and think about saving $1,000 a month, $2,000 a month, $5,000 a month, $10,000 a month, $100,000 a month, whatever you or the business owner is saving. I always think about it like if I were to come in and help this company, how would it change that calculation? How much money would they be able to take out of this business, save and grow over the course of the rest of their life? That’s how I’m always thinking about it. That’s the difference between a CFO vs Accountant

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AccountingTax.com by Andrew Argue is now Corvee