The difference between a CPA and a CFO

While both are important, a CPA and a CFO have different roles in a business. Most people tend to lump finance and accounting in one bucket; these two areas work closely together but are entirely different. Accounting focuses on the past, which historical and current data is essential to plan for the future.  Finance focuses on the future and the direction of the company. A CPA helps minimize tax burden, and manages daily financial aspect of the business while making sure all financial data is accurate. A CFO is the one who is guiding the business and relies heavily on accurate accounting practices, without accurate data the strategy and plan is rubbish. 

Having a CFO is as important as having a CPA as these two complement each other. A CPA is a big part of setting and implementing accounting processes and procedures, as well as reconciling the books and providing accurate financial statements. A CFO takes the financial statements and looks at trends, provides forecasts, budgets, solves cash flow issues and makes sure the business stays on track. If things get bumpy or there are changes in the business, a CFO can easily help the business pivot as things change. A CFO identifies where the company is heading makes data driven decision while implementing a strategy.  A CPA keeps the company out of immediate trouble while a CFO focuses on the long-term financial health of the company. 

When looking for a CFO, make sure this person has a finance background. As most people lump accounting and finance together, they believe a CPA can do a CFO’s job. To reiterate both a CPA and a CFO are key for a company’s financial success. If you need an outstanding CPA, please feel free to reach out to me and I can put you in contact with some of the best CPAs.  I get asked constantly when should a business hire a CFO. Running a business without accurate accounting processes and with no strategy of where the business is heading can be detrimental for the business.  I always tell business owners to first make sure their accounting house is in order and they have accurate financial data.

It is never too late or early to hire a CFO to assist with financial analytics and make data driven decisions. When starting a business having a fractional CFO can help keep the business on track, while having a strategy to grow the business. Businesses which find it hard to make shifts as things change can also benefit from having a fractional CFO in place. In short every business should have a CPA and a CFO as part of their team.