Once a business meets a certain size and complexity they need three distinct skill sets to have the optimum finance department to support their growth and ambition. Many small-to-medium organisations struggle to get the right mix of talent focused on the right things. Because of this, they miss out on the benefits a high functioning finance team can bring.
In a business’ formative years (let’s define this as the business being one to two years old and having less than 10 employees) the finance department exists to keep the lights on and ensure the organisation is compliant. Specifically, the bills and employees need to be paid, BAS completed and paid, bank accounts reconciled and customers invoiced regularly. This requires a low-cost bookkeeping resource and possibly the help of a tax accountant.
As businesses mature they become more complex often having more employees, departments form with varied activities and targets, customer bases diversify, product or service ranges expand, multiple pricing arrangements, more geographies and legal entities and broadened sales channels and partners. With this complexity comes a need for a more specialised finance resource to handle the increased scope and financial requirements of the business – one with a deeper knowledge of accounting, reporting, tax and compliance. Enter the financial controller or specialist accountant.
Businesses that are growing rapidly, expanding geographies or moving into new products need to undertake some form of strategic and financial planning so that they make informed decisions. Businesses need a resource with the ability to plan, model, formulate business strategies, advise to improve decision making and partner with management teams and boards. This is the realm of the CFO. The key difference between a CFO and an accountant, is that CFOs are focused mainly on the future and how to shape it, whilst accountants typically focus on the past; reporting, tax and accounts. Additionally, businesses that are looking to or have raised significant capital often need a CFO to provide shareholders with confidence and comfort that the business is in good hands and has sufficient oversight.
In my experience businesses need three skill sets to have a highly functioning finance department:
Transactional skills (provided by a bookkeeper)
Compliance / tax skills (provided by an accountant)
Strategic and commercial support (provided by a CFO)
What skill sets do you have in place in your team? And what is your business missing out on by not having all three skill sets covered?
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