It’s not uncommon for business owners to see the roles of CFO and accountant as interchangeable. However, each professional plays a distinctly different role in contributing to a business’s overall success. As a financial professional, whether you run a small or medium-sized firm, both a CFO and an accountant have a place — and it’s worth knowing the difference between the two.
Your accountant lays the foundation, while your CFO builds your business up
Businesses rely on an accountant to report what historically happened by compiling data to reflect the company’s current state. An accountant summarizes sales and expenses and plays an instrumental role in managing payroll, corporate tax planning, internal or external audits, and financial compliance.
Where an accountant is more process driven, a CFO professional is more planning driven, and takes a holistic view of your practice’s health and financial well-being.
In the same way that you help your clients manage their financial plans, a CFO brings their analytical skills to advise you on business decisions.
A CFO manages the firm’s economic actions, such as tracking cash flow, analyzing its strengths and weaknesses, and proposing corrective measures to optimize the business. A CFO is the business owner’s partner in crafting a business plan with strategic initiatives to drive the desired outcomes and establish benchmarks to measure success—no longer someone who crunches numbers on a balance sheet.
A CFO can be a trusted, consultative partner with an advanced skillset to:
- Advise on critical business decisions, such as adding a new financial professional to the firm, merging with a new business partner, or acquiring a firm
- Provide capital solutions to access lines of credit and gain special terms on loans, assisting with debt planning and underwriting
- Help you transition your practice with a succession plan that can maximize your payout
- Develop a business plan to minimize risk, improve business efficiency, and help you stay on track to meet both short- and long-term business goals to increase your firm’s value
So the work of an accountant becomes the foundation that enables the CFO to do their work effectively — understanding all the data, providing valuable insights, and helping to drive decision making for the business.
No business is too small to benefit from a CFO
Many business owners assume that to have a CFO, their company must operate at a certain level. But really, a CFO has advanced analytical skills to make data-driven decisions, in pursuit of next-level success, for businesses of any size.
Their ability to build and maintain strong relationships throughout the industry helps business owners stay on top of significant developments. A CFO anticipates regulatory changes and understands the impact of market trends, politics, and domestic and international events to provide critical insights.
Having this type of consultative relationship with a CFO helps connect your business strategy directly to your finances, allowing you to understand the full impact of your strategy today and in the future. While any business can benefit from a CFO, it may not be financially feasible to have one on staff—that’s where LPL comes in.
How LPL can help
LPL’s Business Solutions team developed CFO Solutions to provide practice owners with an affordable option to gain the expertise of a CFO’s skillset. This program connects you to an advanced CFO data analyst to act as your dedicated partner to help you meet your financial goals.