CFO Vs CPA: Which One is Right for You?

Many business owners looking for an experienced financial professional aren’t sure about what the real difference between a CPA (Certified Public Accountant) and a CFO (Chief Financial Officer) is. Let’s start by defining both a CPA and CFO, and then dive into why they aren’t distinctly different roles.

CPA (Certified Public Accountant)

CPA is a license and designation, not a role. In order to become a CPA, you have to pass all four sections of the CPA exam and meet certain education and experience requirements. This license is awarded by the state that an accountant is practicing in, and these individual states set certain continuing education standards.

That’s right. A CPA isn’t simply done learning once they pass the CPA exam. They have to take a certain number of continuing education classes to meet a set “credit” count. If a CPA fails to complete this requirement, they will face potential fines, losing their CPA designation, and may need to meet additional continuing education requirements.

CPAs learn procedures for many different accounting tasks including auditing, tax planning, preparing financial statements, forecasting, cash flow management, and much more. Often, CPAs learn how to help clients in different organization types such as corporations, LLCs, sole proprietors, partnerships, non-profits, and even individuals.

CPAs can be self-employed, join public accounting firms, or smaller CPA firms. These different organization types may influence the services provided and the depth of knowledge an individual CPA has. For example, a CPA firm that has always served small businesses for 30+ years may not be the right professional to help a large corporation.

Now, let’s move onto defining a CFO.

CFO (Chief Financial Officer)

A CFO is a role, rather than a designation. A Chief Financial Officer can be hired on a full-time or part-time basis. Many of you reading this are probably familiar with a full-time CFO that is hired by an individual company.

Part-time CFOs, on the other hand, often serve many clients. They might visit their clients’ offices directly, but often, part-time CFOs serve clients remotely via teleconferencing technology like Zoom, Teams, and Google Meet. These remote based professionals can also be referred to as Outsourced CFOs, Virtual CFOs, or Fractional CFOs.

Many CFOs will have CPA designations, but it’s important to note that a CPA license is not required to be a CFO. While a CPA license can ensure that an accounting professional has the knowledge that a business owner needs for their financial strategy, a CFO with a well-rounded background can have the same knowledge.

We suggest interviewing accounting professionals to ensure the experience you need. Below we will list suggested knowledge your hire should have.

Services Provided by CPAs and CFOs

Your financial professional should be able to develop tax strategies, making sure your business finds tax savings while keeping room for business growth. Your CPA or CFO should be able to prepare a financial forecast (aka cash flow forecast) so you can understand your current and future cash position. A well prepared cash flow forecast will also provide a baseline for scenario planning allowing you to run what-if scenarios for bumps in the road ahead. Scenario planning can also be used to determine the best time to make certain business decisions. Maybe you need to know when your business will be in the right position to hire a COO or when you should buy that new piece of equipment.

The right financial professional will also be able to manage:

• bank relationships

• weekly financial meetings

• budgeting

• cash flow management

• financial statements

• companywide KPIs

• financial strategy

• financial reports

...and other tasks related to staying on track to your business goals.

Choosing the right financial professional for your business can feel overwhelming, but coming prepared with a list of qualities and abilities you desire in a professional will steer you towards the right choice.

If you’d like to learn more about the services we provide, request a free virtual CFO consultation below.