While I serve many of my clients as a fractional CFO, my team and I are also bookkeepers.
In this post, I want to discuss why it’s important for your fractional CFO to also know how to be a bookkeeper, along with the benefits of working with someone who does both.
What Bookkeeping Can Reveal About Your Business
Bookkeeping reveals the financial foundation for how your business is doing operationally. At the bookkeeping level, you gain an understanding of where all the money comes from, where it goes, and how it flows through the business.
As a fractional CFO, I need to understand those things to help my clients understand financial models, cash-flow forecasts, and anything else that requires a high-level approach to their business finances.
Bookkeeping helps me give my clients the higher level of information they need to achieve their goals. Because through bookkeeping, I’m seeing what you’re paying vendors, where the money’s coming from, and what clients are paying.
Turning Financial Information Into Better Decisions
Having timely, updated financial information should help you make better business decisions.
As a bookkeeper I can reconcile the accounts. I can pull financial statements and send those reports to you.
But then what do you do with that information?
That’s where you start getting into the higher-level work that requires me to be your fractional CFO.
For example, maybe you need to figure out your cash runway. When are you going to run out of cash if something doesn’t change? This is what I help you answer as a fractional CFO.
Or maybe you want to grow the business, and you need to buy equipment and hire people. As a fractional CFO, I can help you know if you can afford it.
Because to answer questions like these, we may need to build a forecast, a budget, or some type of financial model. And to do that, we need the foundational bookkeeping information.
It’s worth noting that the information also has to be current. Because if you go to a bank for a loan, they’re going to ask you for your most current financial statements. Ideally, those are updated within the past 30 to 45 days. The bank doesn’t want to see financial statements that are six months old.
Then we have to look at what that loan is going to do to your business.
Maybe the loan is going to cost you $5,000 a month for the next 60 months.
What does that do to your cash flow? Where is your revenue currently? How much does your revenue need to grow to absorb that additional $5,000 a month?
That’s the higher-level work that I provide as a fractional CFO. But I must have the numbers first, which is where my bookkeeping experience comes in handy.
The Value of Working With Someone Who Understands Both
Having that bookkeeping experience means I know what financial information I need and where to find it.
That can help me get to the higher-level financial work you need faster. I know what reports to pull, what accounts to look at, and where to go to get the numbers that I need to build out models and forecasts. I’m not as dependent on someone else to find that information and provide it to me.
It’s also helpful when your bookkeeping isn’t current and up-to-date.
A lot of times, when a business needs higher-level financial support, everything isn’t in line like it should be. Maybe you let your bookkeeper go three months ago, and nothing has been updated since then.
Well, before I can do the higher-level work, we have to get your bookkeeping updated.
If I was your fractional CFO, but didn’t also handle bookkeeping, you would have to find someone else to get your books current. Then I would need that information before I could do the fractional CFO work you hired me to do.
So, you would end up needing two different groups.
Because my team and I do both, we can get your bookkeeping updated and then move into the higher-level financial support you need.
Bottom Line
Not all bookkeepers are fractional CFOs, and not all fractional CFOs are bookkeepers. I hope this post shows you why it can be beneficial to hire a team that does both.
And if you’d like to explore working with me and my team, let’s talk. Click the schedule a consultation button to book a call.