What are all these finance department positions anyway?
In small to medium sized businesses many people, even CEO’s can get confused about what type of person or people you need in the finance department. In this blog series, we will be deep diving into each position. This week we will start off with a quick overview to give you a better sense for what position(s) you may need to hire.
Each company may need a different combination of these positions, and it is a case by case recommendation. If you are just starting to build your finance department or need help analyzing if you have the most efficient team, let us know.
Generally speaking finance departments will have a combination of the following positions:
CFO, VP of Finance, Controller, Accounting Manager, Senior Accountant, Staff Accountant or Accounting Specialist, or Bookkeeper. I wouldn’t say that a company would have all of these positions at the same time, for example, if you are a startup small business (about 5 employees or less) you might just have a part time Bookkeeper. Versus a 20-50 employee company, which might have a CFO, Controller, Senior Accountant, and Accounting Specialist.
Since work starts at the ground up, let’s start with the most fundamental position for a business just starting out, a Bookkeeper or Accounting Specialist. The Bookkeeper will be responsible for all your daily accounting, from paying bills to sending out invoices and collections. You might be thinking, why no reconciliations? The short answer is controls. A company should never have one person doing all of the accounting and reconciliations, this allows for the possibility of embezzlement and just really bad accounting practices. Ensuring that there are at least two people looking at the books ensures that entries are done accurately. Your Bookkeeper can be the only accounting person you have for quite some time, however, ideally the business owner would be the person who is the other set of eyes reviewing the entries and completing reconciliations and reviewing the financials. We will dive deeper into the pros and cons of the position, when to know when you need a Bookkeeper, and when a Bookkeeper isn’t enough in the next blog post.
A Staff Accountant is a mid-level role that does a bit more than a Bookkeeper. In this position the person would be responsible for all the same things a Bookkeeper would as well as doing some balance sheet reconciliations, primarily bank accounts. Most of the time this position would also have a finance position above it, like a Senior Accountant or Controller. In larger Finance Departments you could have more than one Staff Accountant. This position would need oversight of a higher level position, as mentioned above, and would have the option for growth within the department.
Once your finance department is large enough, having a Senior Accountant on staff could be a great addition. In this role, the person will assist with P&L oversight and complete balance sheet reconciliations, provide limited financial statement prep, and conduct much of your annual audit. This role would most likely have a Staff Accountant or Accounting Specialist entering all of the transactions and work closely with other members of the finance team.
A common staple in a finance department is an Accounting Manager or Controller. Some small businesses can get by with just a Controller if the volume of work is low enough. This is an efficient position, because Controllers can have the skillset to do bookkeeping, as well as prepare financial statements. Of course having just one finance person creates control issues, but with proper oversight from the business owner, it is still quite possible as mentioned in the Bookkeeper section. Typically, Controllers will be responsible for general ledger oversight, management of the finance teams daily activities, financial statement preparation and general middle management. The Controller is the middle management of a finance department that has an Executive and other staff positions below it.
If your company is doing quite well or sees growth on the horizon, you may want to consider a VP of Finance. A VP of Finance is typically going to have at minimum a Controller and Accounting Specialist in their department to handle the day-to-day accounting. Where the VP of Finance differentiates from a Controller is their ability to manage people (which they usually have more experience doing), build models, complete board presentations and interact with the board and investors, as well as manage a cap table.
Finally, you may be wondering where does the CFO (Chief Financial Officer) fit into the equation. Well in a small business the difference between a VP of Finance and a CFO can be negligible and the terms almost interchangeable. Although, typically a CFO will have the same skillet as a VP of Finance, generally they will spend a majority of their time managing the finance department and assisting the company from a strategic point of view. They can also have a hand in fundraising, M&A advisory, and setting up the company for due diligence in the case of potential acquisition. A CFO is generally less "in the weeds" than a VP of Finance.
Next up in the series will be a deep dive into the Bookkeeper position. Stay tuned!
