The CFO'S Perspective

Here’s the scenario: You’ve discovered a problem with your books. It has rippled through into your key financial reports and possibly also affected corresponding tax filings for that period. Your mind starts spinning.

How can you tell if this bookkeeping problem is fraudulent activity or just a simple mistake?

There is a common misconception that early-stage startups and low-growth companies don’t really need executive financial leadership… not yet anyways. This misconception holds that hiring a Controller or CFO is something that comes later, after enough growth has occurred or growth is happening more quickly than before.

And while it’s true that it often doesn’t make sense financially for a small company to hire a full-time in-house CFO right away, the need for experienced financial leadership isn’t something that a company just graduates into once they hit a certain revenue benchmark. Strong financial oversight and leadership is something that every business needs, and many business owners simply can’t provide alongside their other duties. This is especially true when the business has more complicated financial needs like a complex capital structure, multiple revenue streams, deferred revenue, international operations, and/or seasonality, to consider.

Faced with both of these realities – that they can’t necessarily afford a Controller or CFO, and that financial oversight and leadership is important – they instead opt to hire a bookkeeper or accountant to manage their finances, hoping that will be enough for now as a stopgap until they can afford more later. However, a bookkeeper or accountant role may not be enough to do what they need done if they have more complex financial needs. And, if the business owner doesn’t have a financial background, they may not even realize there is a mismatch there to understand what they’re missing out on.

The last decade has seen an unparalleled push for greater efficiency. Increased automation across all business sectors has ushered in a focus on “faster” and “cheaper.” And while these are certainly important pursuits amidst rising labor and materials costs, they certainly should not be a company’s only focus. Chasing faster and cheaper almost always comes at the expense of “better,” which is a shame because “better” can actually go a long way in achieving both.

It's a tough environment for small businesses in the United States, particularly new ones. The Bureau of Labor Statistics reports that almost 20% fail in their first year and only about half make it to five years. The threats are piling up, and they range from failing to find a viable product or service to customer service gaffes and even cybersecurity issues. But some of the biggest problems that small businesses face are financial in nature.

Financial woes can impact a company of any size. 2018 marks the 10-year anniversary of the height of the financial crisis when regulators walked into Seattle's Washington Mutual and shut down one of this nation's largest regional savings and loans for good. Few longtime area residents have forgotten the impact that Frederick & Nelson had on the area's retail scene, before becoming victim to some strategic and financial missteps. Whether a company is large or small, public or private, many of these issues begin at the granular level.

The value of working with a bookkeeper is undisputed; bookkeepers are professionals at managing the day-to-day financial transactions of business, providing the business owner with the information necessary to make sound financial decisions for the future. What’s more, there is no doubt that regardless of the type of business that you operate, bookkeeping and accounting services are invaluable, and essential for efficient operation.