What is Bookkeeping?
The process of bookkeeping involves referring to source documents (items like bills, invoices and receipts) to record all financial transactions within your accounting system. A bookkeeper will typically review the source documents in order to post income transactions (sales), expense transactions, inventory transactions and other accounting transactions in your accounting software. A qualified bookkeeper will free up valuable time so you can focus on business development, management and strategic decision making.
What is Accounting?
Accounting often includes bookkeeping but it can vary depending on the size of your organization. Accountants will prepare monthly, quarterly or yearly financial statements based on source documents (items like bank, credit card and loan statements) and the data prepared by your bookkeeper (if you have one). In some cases accountants will handle the bookkeeping and accounting functions as a consolidated service. Financial statements provide business owners with valuable information about their business performance including details on income, expenses, assets, liabilities and equity. Accountants often handle tax matters including payroll tax, sales tax and income tax. The process of accounting is usually focused on prior financial activity.
What is a Chief Financial Officer (CFO)?
A CFO is responsible for managing all financial operations. This often encompasses bookkeeping, accounting, tax and other related financial operations. A CFO will supervise the bookkeeping on a day-to-day and week-to-week basis. On a monthly basis a CFO will manage the preparation of financial statements, performance reports and additional business intelligence reporting and analysis (KPIs/Metrics) in select circumstances. A CFO is also often involved in the preparation of budgets, projections and forecasted financial statements. The CFO focuses on accounting and bookkeeping for prior periods with the goal of predicting (and adjusting) future performance to meet management requirements and provide value to stockholders.
A CFO provides great value for any business. Many CFOs prepare daily and weekly financial reports to monitor and improve business performance throughout the month. Detailed analysis and insight into strategic decisions for improving your business will often originate with the analysis completed by a CFO.
What is a Virtual CFO?
A Virtual CFO is an affordable alternative for small and medium businesses in need of a Chief Financial Officer. Virtual CFO Services use cloud-based technologies to remotely complete all functions normally handled by a Chief Financial Officer. By utilizing technology a Virtual CFO can assist multiple small and medium sized businesses at a much lower cost than a full-time CFO. Most Virtual CFO services will handle all accounting, bookkeeping, payroll and tax functions allowing the business owner/manager to focus on strategic decision making and growth.
Can I Do My Own Accounting and Bookkeeping?
While today’s accounting software and automation technologies make it possible for many very small businesses to handle their own accounting internally you should ask yourself if that is really a wise decision. Do you have experience in accounting and bookkeeping? Do you know the difference between an asset, liability, equity item, income item or expense item? If you cannot answer with a resounding “YES” you probably should not do your own accounting and bookkeeping.
Even if you can do your own accounting and bookkeeping you may be hit with a significant “Opportunity Cost”. You may be missing opportunities to grow and develop your business if you are spending your time on the day-to-day accounting and bookkeeping functions.
What is the difference between bookkeeping/accounting services and CFO services?
Our bookkeeping and accounting services are designed to be an affordable solution for small and medium sized businesses who are not yet ready for a CFO.
What is a KPI?
KPI stands for Key Performance Indicator(s). KPIs are various metrics used to analyze business performance. To generate KPI reporting and analysis you must have accurate accounting records and financial statements. Using that data a KPI report can be generated to provide far greater insight into your overall business financial health. KPI reports often present your financial statement data in an easy to read graphic format. A skilled business accountant or CFO can use the KPI reporting and analysis to predict and adjust future business performance.
What is Business Intelligence?
Business intelligence is a fairly broad term that can encompass many different areas. For our purposes business intelligence refers to a deeper insight and understanding into the financial health and performance of your business. KPI reporting and analysis is a form of business intelligence.
Do Small Businesses Need a CFO?
A Virtual CFO Service is the ideal solution for most small businesses. For an affordable price small businesses can access a greater level of advice, analysis and professionalism by partnering with a qualified virtual CFO service. Every business can benefit from a CFO or skilled business accounting and bookkeeping service.