Are You a Chief Financial Officer or a Bookkeeper?

January 19, 2023

Many business officers holding the title of Chief Financial Officer are really bookkeepers. This is dangerous for the institution and for the employee.

An institution hiring a chief financial officer (CFO) should receive high-level financial management. An unqualified CFO puts him/her self in a precarious position if all he or she is doing is record-keeping and reporting when your employer is looking for much more than that. An institution of higher education requires solid, strategic leadership; this requires much more than a bookkeeper can or should provide.

What’s the Difference Between a CFO & a Bookkeeper?

A CFO is responsible for:

Financial planning, both long- and short-term
Projecting financial needs to aid in strategic decision making
Interpreting financial data and trends for management use, looking at the story behind the numbers, not just the numbers
Developing effective capital structure, managing institutional assets, managing lender/banking relationships
Managing effectiveness and efficiency of operations
Managing and understanding financial risks

Milestone Advisors says, “...a CFO takes on a broader role in planning for the current and future financial needs of the business.”

CFO Edge says, “While the primary function is to look ahead, the CFO must also be able to understand past financial performance in order to accurately predict the organization’s financial future.”

A bookkeeper is responsible for:

Keeping accurate financial records
Performing accounting transactions
Creating financial reports
Monitoring internal controls
Reconciling cash and other accounts
Performing routine financial and administrative functions

CFO Edge says, “The primary function of the [bookkeeper] is to maintain and operate the books and records of the business, looking back at data already generated.”

The Overture Group says, “A [bookkeeper] is typically the day-to-day manager of the tactical accounting issues.”

A CFO Is a Critical Role in Any Institution of Higher Learning

In the absence of a true CFO, key responsibilities are delegated to inexperienced lower level employees resulting in missed opportunities and reactive decision making. Alternatively, senior administrators (typically the president) assume the duties of CFO in their “spare time.”

We must ask, then, if the president is performing the role of CFO, who is performing the role of president? It is not realistic or advisable for a president, or anyone else, to tack on CFO responsibilities to their schedule. Each of us are limited to the same 24 hours in a day; something will have to give.

A president’s role is vital—if a president is taking even a part of their day to perform CFO responsibilities, those hours, which should’ve been spent on presidential matters, are wasted. An institution cannot reach its full potential without a true CFO. A quality administrative team requires experts in all areas of higher education management, including financial management.

A bookkeeper’s role is to look back. A CFO’s role is to look forward. All institutions require the services of a true CFO. Without it, the institution is guaranteed failure.

Why Do Institutions Settle for a Bookkeeper When They Really Need a CFO?

Lack of Perceived Need

Often times neither the president or the board understand the importance and the value of a CFO. This is most often seen in smaller, less sophisticated institutions with weaker boards. A sophisticated board will understand—and demand—strategic financial leadership.

Current Staff Is “Doing a Great Job”

An excellent bookkeeper is valuable to an institution. Knowing you have quality information is critical. Expecting a bookkeeper to serve as the CFO is irresponsible and short-sighted.

We Can’t Afford It

Maybe because your institution doesn’t have any financial leadership? This is a self-fulfilling prophecy. Poor leadership results in a lack of quality financial planning and management, which leads to a lack of financial progress, which means an institution can’t afford a lot of what it truly needs. A quality CFO can get an institution off this track.

Making the Transition to CFO

If you are an institution looking for a new business officer, gain a deep understanding of the needs of the institution, the roles and responsibilities demanded of your leadership, and hire effectively.

If you are an institution who hired who you thought would be a CFO but you’ve discovered you really have a bookkeeper, you have a responsibility to your employee. They accepted the position on good faith. If you didn’t really understand what you actually needed, that’s not their fault. You will need to work closely with them to either 1) bring them up to speed, by providing clear expectations and the training to achieve those expectations, 2) transition your current employee to someplace else in the institution, or 3) work with the employee to find other employment without jeopardizing their career, their budget, or their family.

If you are an employee that wants to be (or already should be) a true CFO:

Assess your abilities. Do you have what it takes to take your role to the next level? The skills required of a CFO are vastly different than the skills required of a bookkeeper. You need to be honest with yourself—if you took the job of CFO and have recently discovered that you’re really a bookkeeper, you should consider whether or not the job is right for you.
Assess your institution’s ability to help you migrate. Does your president and/or board understand what should happen? The CFO should be an integral part of the senior administrative team. Will your president place that value on you as CFO?
Assess your interest. The expectations of a true CFO are significantly higher than that of a bookkeeper. More stress, more hours, and more responsibilities. Will you be paid more or not? Is it worth it?
Are you adequately educated? A CFO is typically trained as such. A CPA license does not a CFO make. A CFO needs appropriate education—typically a masters degree in a business/finance field. In a few cases, prior work experience can prepare you for this role, although many argue that the work of a CFO is more of an art than a science.
Get connected. You can’t—and shouldn’t—do this on your own. All good CFOs have a network of trusted peers, top-notch resources and ongoing professional development opportunities.
Assess your progress. If you are unable to make sufficient progress within a reasonably quick amount of time, you are endangering your institution and your career. If it isn’t going to work out, make that decision sooner rather than later and work closely with your employer to transition you out of the position.