Understanding finance roles.
The difference between a bookkeeper, an accountant and a CFO
By Candice Brett, Managing Director, Pivotal Finance
If you're building out your finance function for the first time, it's easy to bundle a bookkeeper, an accountant and a CFO into the same job: someone who deals with the money. But in practice, they are three very distinct roles that bring different skills and services to the business.
This blog sets out what each one does, and how to work out which one your business needs.
Why the roles are sometimes confused
All three roles work with the same numbers, but they operate at very different levels. One records what has happened, one reports and analyses historic data to inform future forecasts and one uses it to strategically shape what happens next. If you hire the wrong one for your stage, you might overpay for expertise you don't yet need or leave a critical gap unfilled.
What does a bookkeeper do?
A bookkeeper handles the day-to-day transactional record: processing invoices, reconciling bank accounts, running payroll and keeping your accounting system up to date. It’s important foundational work, as getting it wrong can create problems for everyone downstream.
Bookkeepers sit at the more junior end of the finance pay scale, reflecting the scope of the role. What they don't typically do is interpret and analyse the numbers or advise on strategy.
“Accountants typically command a higher salary than bookkeepers, reflecting the professional qualifications behind the role.”
What does an accountant do?
"Accountant" covers two distinct disciplines:
A financial, or compliance, accountant is focused on external reporting: preparing statutory accounts, filing tax returns and making sure the business meets its VAT and Corporation Tax obligations.
A management accountant works internally, producing management accounts, forecasts and cost analysis to help the business make decisions, rather than to satisfy external requirements.
Accountants typically command a higher salary than bookkeepers, reflecting the professional qualifications behind the role.
What a CFO brings to the business
A CFO operates in a very different space. Where a management accountant produces the forecasts, cost analysis and reporting the business needs to run well, a CFO sits at board level, using that information to shape financial strategy, own the numbers behind fundraises, acquisitions and major investment decisions, and manage risk across the business as a whole. It's as much a leadership role as a financial one; a CFO is accountable for the business's financial direction, not just its financial information.
A full-time CFO typically commands a significantly higher salary than either of the other two roles, reflecting the seniority of the position and the scale of responsibility that comes with it. It can be a big commitment for most growing businesses, and rarely one they need to make in full from day one.
“Most growing businesses need an element of all three roles, often before they can justify hiring a full team for each.”
Which one is right for your stage
Most growing businesses need an element of all three roles, often before they can justify hiring a full team for each. That's where outsourced or fractional support earns its place: it gives you access to bookkeeping, accounting and CFO-level thinking as and when you need it, without the cost of building an in-house function from scratch
A final thought
The real value in understanding these roles is knowing exactly which level of support your business needs at its current stage, and when you need to step it up. Get that right, and every stage of growth becomes a little easier to manage.
How Pivotal Finance can help
Here at Pivotal Finance, we offer a broad range of business finance support that can flex and scale as your business needs it.
Pivotal Foundations covers the bookkeeping and management accounts side of the business. We're used to working alongside a business's accountant on compliance and can recommend trusted partners if you don't already have one in place.
Pivotal Strategy adds CFO-level thinking on a fractional basis, for the strategic oversight and board level support growing businesses need without a full-time hire.
And if you’re looking at a fundraise or acquisition, our Pivotal Deals service can provide the direction and guidance you need.
If you're not sure which one your business needs, book a free discovery call with the Pivotal Finance team, we'd love to hear from you.
