As a business owner, it can be challenging trying to figure out the next hire to take your business to the next level. Often, business owners wear multiple hats, balancing all the responsibilities of running a business with no time to invest in the future of the company. At The Finance People, we often find that businesses come to us thinking they need a part-time Finance Director, but following an audit and consultation, we conclude they actually need a bookkeeper - and vice versa. There can be a lot of crossover between different roles within a finance team and this can be confusing, that is why in this blog we will take a look at whether you need a bookkeeper or a Finance Director (FD).
A bookkeeper is a key member of your finance team, they are an accounting professional responsible for maintaining detailed records of financial transactions such as purchases and sales. How the records are collected and stored will vary due to preference and systems available, but the role itself doesn't vary greatly between businesses.
Whereas, a Financial Director (FD) is the individual taking lead of the finance team within your business, usually reporting to the directors or CEO. A FD has a wide company view that puts them in a position to offer financial and business advice, as well as being responsible for strategic planning, negotiating contracts and managing investor relationships.
In this blog we will take a look at the key differences between the roles to assist you with deciding whether your business needs a bookkeeper or an FD.
The Role of a Bookkeeper
As we have discovered, a bookkeeper is a member of accounting staff that is tasked with maintaining detailed records of a businesses financial transactions. A bookkeeper differs from an accountant, as accountants will use the information collated by bookkeepers in order to create reports and advise a business on trends and forecasts. However, in some cases bookkeepers may share some responsibilities with an accountant, such as tax returns or preparation of annual reports. Traditionally, a bookkeepers sole responsiblity is to carefully document all financial transactions in a ledger. But, some businesses do choose to involve their bookkeeper in strategy development. The core responsibilities of a bookkeeper are:
Collating financial transactions on software such as Xero or Quickbooks.
Uploading sales invoices and purchase invoices
Checking the books against bank statements to establish accuracy
To summarise the business finances in reports when required
Bookkeepers are beneficial to smaller companies who may not require the full services of an FD. If your business does not have plans to raise funds or require an exit strategy then a bookkeeper can provide the financial services needed. A bookkeeper is able to provide the business owner with the essential information required for management information, and can process invoices in order to save time and resource for the business owner. You can have a bookkeeper who works on or off-site depending what suits the needs of your business, and there are even options available through The Finance People to recruit a bookkeeper for just one day a week if this is all your business needs support with.
Role of a Finance Director
A Finance Director (FD) or a CFO is you're from the USA, is the leader of everything financial within a business, only superseded in authority by the directors or CEO. FD's are crucial to a business for providing strategic advice with a goal to help the business grow and achieve the business goals. The core responsibility's of an FD are:
To lease with the directors and the rest of the wider business
Provide strategic planning and assist with implementing strategies
Manage investor relationships
Manage departments such as finance, HR and IT.
Provide market analysis
A FD is beneficial to a business who are wanting financial support that is extremely strategic and detailed, from an individual who is able to build financial models. A business can rely on their FD to carry out a vast array of financial tasks, including submitting cash flow forecasts to the banks in order to raise funds. The Finance People are also able to offer part-time FD services to businesses who are looking to have the support of a FD on a flexible basis.
The Differences Between a Bookkeeper and a Finance Director
There are many factors that strike a contrast between the two roles, the main one being skillset as bookkeeper is not required to have the qualifications or experience needed to be a FD. Additionally, the level of involvement sets these two roles apart as an FD will have a much greater level of involvement within the wider business and strategic planning.
The amount of responsibility is another factor that differentiates a bookkeeper from a FD, as a bookkeeper is responsible for the essential task of maintaining records, whereas a FD will be responsible for providing valuable feedback and strategies based upon the information provided. Last, but certainly not least, a big factor that separates these roles is the cost. Due to the skillset and responsibilities undertaken by a FD, you can expect to pay more for their services than that of a bookkeeper.
Factors to Consider When Deciding Between A Bookkeeper and a Finance Director
When deciding on whether your business needs the services of a bookkeeper of a financial director, you will need to consider the size of your business as well as the resource currently available. You will also need to factor in the financial needs and goals of the business in order to make the decision between a bookkeeper or a FD, ambitious goals will require the strategy provided by a FD whereas businesses still trying to establish themselves may benefit better from a bookkeeper.
Finally, the available budget will play a huge role in deciding between a bookkeeper and a FD. Smaller businesses may not be in a position to recruit a FD no matter how beneficial they may be.
Hiring Finance Experts for your Business
Thankfully, The Finance People are able to provide affordable options to SMEs and start-ups with flexible access to part-time finance experts of every level. We have a solution for every budget, from a part-time FD working once a week to bookkeepers working remotely to support your business.
By leveraging our part-time finance solutions at The Finance People, not only will you get support in finding the right fit for your business, but we will also provide ongoing support. Plus, should your dedicated finance expert be sick, on maternity leave or otherwise absent, we can provide additional support.
If you are still unsure about which finance professional your business would benefit best from, get in touch with us for a free consultation to discuss your business requirements.