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Why CFOs Shouldn’t Come From Public Accounting

There can be confusion surrounding the differences between the role of a Chief Financial Officer (CFO) and that of a Certified Public Accountant (CPA). It’s important to know that both jobs are very different, serving entirely distinct business needs. Here in the San Francisco Bay Area, this is even more important for small and middle-market businesses due to the rapid changes and complexities in the their respective industries.

From business acumen to data-driven innovation and strategy, the CFO is a kind of person a company uses to ensure all business operations and financial decisions are sound. In addition to being a data analyst and risk assessor, CFOs are moving into more strategic roles than ever at organizations that need experienced, level-headed decision makers in markets that are rapidly changing and uncertain. It is the CFO who provides the ongoing strategic and operational insight needed to successfully operate and grow the business in a profitable way.

Unlike expert CFOs, CPAs have no real training, knowledge, or experience in financial and operational analysis, strategy, cost and cash flow management or profit analysis in order to excel in the role of a CFO. Trying to make a CPA into a CFO usually does not result in a favorable business outcome.

A CFO is a member of the executive team of a company and is responsible for managing all financial aspects of the business. An experienced CFO should have a strategic focus with a strong understanding of how to assess financial risk, manage budgets and cash flow and develop standards for fiscal performance for the company. He or she also has responsibility for assessing and designing financial systems and relevant business processes not only to capture the appropriate financial and operating data, but also to provide value-added insight. Where the CEO provides the leadership for the company, the CFO’s role is to be a trusted advisor of the CEO and other executives as to how to align their financial strategy to meet corporate goals.

The CPA is primarily in the business of preparing tax returns. The CPA should collaborate with the CFO, providing tax insight and advice that will help guide financial decisions relative to the goals and objectives of the company. The CPA will provide insight with a strategic viewpoint related to taxes, and not necessarily strategic insight related to the long-term goals of the business.

The CPA tends to look towards the best immediate tax strategy for a company whereas a CFO needs to look much farther forward. A CFO is concerned with the development of the business, ensuring that it is growing in a profitable way, while staying on track to meet other operational targets. The CPA’s job is to assess the numbers after the fact, either for tax preparation or for auditing. They advise about the future but advice is typically based on the numbers from the past, and always relative to a tax strategy.

Alternatively, the CFO needs to look at what are the best ways to meet the strategic goals of the company in the future. His or her job is to plan for growth, or acquisitions and use the performance figures to determine where the company needs to invest or modify its strategy to meet corporate goals.

If you are a business owner or CEO within the San Francisco Bay Area or Silicon Valley, in need of an experienced part-time CFO to help your company improve profit margins, cash flow, business process design, as well as accounting and billing process management, our highly skilled outsourced CFO services provide direct access to high-quality expertise in a cost-effective manner.

CFO Growth Advisors (CGA) specializes in unique and highly effective growth strategies that are tailored to help companies grow more quickly and efficiently while improving sales & profit growth. Contact us to learn more.

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