Almost every nonprofit eventually reaches a point where it needs help with its accounting beyond what the existing team provides. Deciding which positions to add and who to hire can be challenging. Should you hire a bookkeeper? An accountant? Or do you need a Chief Financial Officer (CFO) and additional accounting support staff?
Each person in the accounting team—bookkeeper, accountant, CFO—performs different functions. Let’s discuss what they do, and how you can figure out which one you need to help your nonprofit grow.
What Do Bookkeepers, Accountants, and CFOs Do?
Think of bookkeepers, accountants, and CFOs like the musicians in a symphony orchestra. Each plays an important role in keeping an organization’s finances humming. Sometimes you need one role, but as your organization grows, you’ll need the full “symphony” to make beautiful financial music.
- Bookkeepers process daily transactions. They see that the bills are paid, invoices are sent, and the accounts are reconciled. They also process payroll.
- Accountants provide similar services to bookkeepers, but also prepare financial statements, ensure compliance with GAAP, and help you understand your organization’s financial information.
- Chief Financial Officers (CFOs) focus on strategy. They provide advice, strategic direction, prepare and explain budgets, work with lenders, and provide overall financial leadership.
Each person plays an important role in your organization’s growth. Choosing the right role to complement the existing team depends on which growing pains you’re experiencing.
Choosing the Right Role for the Organization’s Needs
One way to assess which position is needed is by examining your current pain points. Where is the organization feeling the pinch?
- Are you struggling to issue invoices, pay bills, and reconcile accounts each month within two weeks of the end-of-month close? If you answered, “Yes,” you probably need a bookkeeper.
- Do you need help preparing financial statements? Are you struggling to handle tax season because your accounting system isn’t kept up to date? Do you need more in-depth reports but can’t easily generate them? This indicates another accountant on the team might be needed.
- Is your organization’s president making all financial decisions? Could leadership use senior-level advice and strategy-setting discussions? Are you struggling with budgeting, forecasting, and planning? These are areas that a CFO would support.
Each position plays an integral role on the team. However, sometimes their job functions do cross into a gray area. For example, an accountant may also perform some bookkeeping functions in a small organization. A CFO may also do some accounting, such as preparing financial statements, depending on their complexity and the organization’s needs.
Should You Outsource or Hire Someone?
This is a great question, and one that you should consider carefully. Many organizations assume that all accounting functions should be handled by a full-time person. However, in a rapidly growing organization, it may make sense to outsource one or more roles. Many nonprofits, for example, outsource some of the strategic accounting decisions to consultants like Welter Consulting. We can bridge the skills gap and provide guidance in many matters.
Others hire a fractional CFO to help build a strategy while their full-time staff handles basic daily accounting. A fractional is a part-time, independent contractor typically hired for their deep industry experience. They work for specified hours each month or on designated projects, adding high-level skills and clarity to the organization without the expense of a full-time hire.
Another way organizations outsource some of their accounting functions is by using a third-party payroll processing firm. As the name suggests, such companies handle payroll and related tasks such as payroll taxes. Any combination of full-time, part-time, and outsourced help may be appropriate. It really depends on your needs, budget, and preferences.
You Have Choices
The good news is that you have many choices. You can hire either part-time or full-time staff or hire a fractional contractor or a consultant. Or you can find an external firm to augment internal resources. By understanding the differences among these positions and how each serves an organization best, you can make better choices on how to improve your accounting and finance areas.
Welter Consulting
Welter Consulting bridges people and technology together for effective solutions for nonprofit organizations. We offer software and services that can help you with your accounting needs. Please contact us for more information.
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