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Virtual CFO vs Accountant 2024: Don't Use Your Tax Accountant as CFO Advisor

Ryan Barnes

Ryan Barnes

February 13, 2024

“I don’t need a virtual CFO, I already have an accountant” - The dangers of letting your tax agent play the role of CFO.

In the world of finance, the roles of traditional tax accountants and CFOs are often misunderstood or conflated. 

While both play crucial roles in contributing to an organisations financial health, their responsibilities, skill sets, and strategic contributions differ significantly, and it’s important to know these differences based on the needs of your business.

Let’s make one thing clear from the start, CFOs and accountants complement each other greatly. They maximise value for your business by exploiting that relationship. They should be a Dream Team. 

This article aims to shed light on the key distinctions between traditional tax accountants and CFOs, emphasizing why you need both in your corner, and why, at times, neither should step into the other's lane.

Different Skill Sets and Responsibilities

In many ways, a tax accountant focuses on the past, while the CFO is dialed into the past, present and future. This shows already why it is crucial for the two parties to interact and work together as the information from the past - books, reporting, for instance - is imperative to make strategic decisions for the business. Below a quick summary of the key differences: 

Scope of Responsibilities:

  • Tax Accountant: primarily focuses on financial transactions, preparing financial statements, and ensuring compliance with regulatory standards. Their responsibilities revolve around income tax, GST and overall compliance. This can often be a month after the quarter end, or in the case of year end work, 3-9 months after. They care about minimizing tax and at your personal level too, they help with structures and are an intermediary with government bodies.
  • CFO: Chief Financial Officers, on the other hand, operate at a strategic level. Their responsibilities extend financial operations and encompass financial planning, risk management, and decision-making. CFOs build forecasts, provide information to the tax agent, review agreements, help make decisions and shape the financial direction of the company. They care about monthly performance, forward cash flow, commercial arrangements, obtaining funding, grants and the exit strategy.

Strategic Decision-Making:

  • Tax Accountant: essential for providing tax driven input into situations, but they are not typically involved in high-level decision-making. Their role is to support decision-makers by presenting options and consequences and finding the lowest tax outcome.
  • CFO: integral members of the executive team, actively participating in strategic decision-making. They analyse financial data to guide the organisations long-term goals, assess risks, and identify opportunities for growth. They also have additional context from understanding the business and the shareholders more intimately and how the finance function works.

Risk Management and Appetite:

  • Tax Accountant: focuses on ensuring compliance and accuracy in financial reporting, lodgements and deadlines. While they contribute to risk identification, their primary role is to maintain a tax efficient structure and good standing with government bodies. Tax accountants are conservative in nature and will often be more inclined to suggest savings strategies over growth opportunities.  
  • CFO: are key players in identifying, assessing, and mitigating both financial and operational risks. They work closely with the entrepreneur to develop strategies that produce return and safeguard their failure. They will ultimately want to grow the value of the business and as such look to find ways to make things happen, like obtaining debt or equity to fund activities.

Communication Skills:

  • Tax Accountant: Strong technical skills in accounting principles and standards are crucial for accountants. They need to communicate financial information clearly. They also can regularly be delayed in their approach and reply while working on other client matters, key deadlines, and are time-sheet driven, harder to get a hold of and need time to digest information as they don’t work on it regularly.
  • CFO: In addition to technical expertise, CFOs must possess strong communication skills and be highly available to convey complex financial concepts to non-financial stakeholders. They act as liaisons between the finance department and other departments within the organisation. They take the important inputs from others, including the tax accountant, to weigh up the situation, providing recommendations to boards and owners on options and pathways to take.

Understanding the distinctions between accountants and CFOs is essential for individuals aspiring to pursue careers in finance and for organisations seeking to optimise their financial management. This is also true for bookkeepers, which we’ll cover at a later date. Recognising and appreciating the unique strengths of each role is crucial for fostering a cohesive and effective financial management team.

Imagine Utopia: When All Departments Click 

Utopia is an imagined place where everything is perfect. We believe that all finance departments have a distinct role and the perfect outcome can be achieved if they all interact with each other in the right way. Here’s a graphic that showcases the ideal interaction between the different finance departments: 

Did You Know You Can Outsource Your CFO Services? 

Outsourcing has become a game-changer, letting companies hand off all sorts of tasks. Need tech help? Outsource IT. Want someone else to handle customer service? Outsource that too. From coding to answering calls, it's all fair game. This shift lets businesses be nimble, focusing on what they do best while leaving the rest to specialists. It's not just a trend; it's a smart move in a world where getting things done is as important as doing them yourself.

Outsourcing has historically been a focus on commoditised entry level roles and is providing significant relief there, but recently it has evolved up the value chain to also include expert services.

Image Below - How TWIYO imagines CFO Advisory complementing the finance ecosystem building towards a full-time CFO position:

In particular for small to medium sized businesses who often have cash constraints and should be directing every dollar towards growth and business development initiatives, it is hard to justify hiring a full-time CFO. In fact, for most businesses it is counter-productive and inefficient. It requires deep consideration of cultural fit, recruitment time, on-costs, leave liabilities and facilities provisions that make the process elongated and have even more hidden costs attached to them.

Instead of locking in a full-time CFO, smaller and mid-sized businesses are flipping the script. They're outsourcing CFO services, bringing in financial experts with strong track records for a monthly cost, and without the hefty payroll commitment. It's like having financial firepower on speed-dial.

This way, businesses get top-notch financial guidance without the overhead, keeping things agile, efficient, and budget-friendly. It's not just a money move, it's a strategic play for businesses looking to thrive without the hefty CFO price tag.

Ready to Grow your Business? 

We believe your VirtualCFO should provide valuable commercial financial advice. This can only be achieved when your CFO has previously “worn the hat” in a growing business. Someone who has experienced the pain of cash flow squeezes and how to navigate them, someone who understands commercial agreements and the key watch-outs, but ultimately the person who has learnt from being the finance leader sitting shoulder to shoulder with the CEO in times of turbulence or opportunity.

We are pleased to say, our Directors at TWIYO have sat in that hot seat, so you can be rest assured that our advice comes from experiencing it first hand. We recommend when selecting a CFO advisor that you look closely at their experience and ask the important questions around true domain experience.

To learn more about our CFO Advisory Services, book a free CFO Health Check today so we can learn more about your business and explore and provide actionable insights to immediately add value.

Ryan Barnes

Managing Partner

Ryan has the foundations of large chartered firms and multi-national businesses, but it wasn’t long before he found his home in the private and entrepreneurial space, having raised, scaled and exited businesses from the inside. Since TWIYO's inception in 2020, Ryan has consulted at a CFO level to over 100 scale-up businesses - driving its recognition as an AFR fast-starter.

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