The Difference Between an external CPA firm and fractional CFO (and an interesting solution for employing both)

By: Beth Mullaney, Director of Business Development, Partner

Business owners of any size need a financial bench that can accommodate their ever-changing needs – everything from bookkeeping, tax compliance and reporting, to revenue forecasting and long-term financial strategy. There is a common misconception among small and medium-sized business owners that an external CPA firm and the role of a Chief Financial Officer (CFO) are interchangeable, but this is far from the case.

A CPA firm is typically more tax and audit focused while a CFO is more focused on an organization’s internal long-term financial strategy, which includes forecasting, budgeting, cash flow issues and more. While the external CPA firms and CFOs are financial experts, they have vastly different specialties and roles. It is critical to your business, regardless of size, that you understand the difference.

  • External CPA Firm Certified Public Accountants– One of the greatest benefits a CPA firm will bring to your business is their knowledge of tax law and compliance. The firms experience is geared toward providing tax advice, looking at your company from a macro level, and offering external advice on a quarterly basis.
  • Chief Financial Officers– A CFO’s primary function is the exact opposite; they are an internal resource to examine your business at a micro-level, offering weekly guidance on the company’s financial goals, pricing models, and the best ways to allocate resources like capital, people, and equipment to bring the most revenue in.

Companies that utilize a CPA firm and a CFO have both ends of the spectrum covered. And growing a business requires both of these roles to facilitate collaboration and establish a connection between past activities and future strategy. In the best-case scenario, CFOs work very closely with CPA firms to ensure that the company is moving forward financially while saving as many tax dollars as possible.

Many small-and medium-size businesses believe that employing a full-time CFO is an impossibility because of budget. But that doesn’t mean you can’t benefit from the services of a fractional CFO. A fractional CFO allows you to receive the expertise of an experienced CFO on a part-time or contract basis. This model is significantly less expensive than hiring a full-time CFO but still provides you with you a level of expertise and insight that would otherwise be unavailable. Contact us at [email protected]  to learn more about Rankin McKenzie’s fractional CFO services.