Who’s counting the money?

As the demands of your business grow, you’ll inevitably face important decisions about staffing and managing your accounting department.

And because accounting requires a broad range of skills, addressing all of them can prove tricky.

Many business owners make the mistake of giving one person two levels of responsibility, such as a controller/bookkeeper. The problem with this is that you can wind up with an overqualified and overpaid controller spending an inordinate amount on straightforward bookkeeping tasks. Expecting a bookkeeper to serve as a controller can result in more serious problems.

So how do you build an effective accounting function for your business? First, you must understand the accounting skills your business requires. Next, you need to evaluate the options for addressing these requirements on an ongoing basis — whether by internal staff or outside vendors.

Understanding the skills

Here are four common accounting titles, with descriptions of their usual areas of responsibility:

Bookkeeper — Performs routine accounting tasks, such as posting bills, writing checks, making deposits and preparing invoices.

Staff accountant — Manages the reconciliation of accounts, posting of journal entries and production of monthly statements.

Controller — Oversees the systems and procedures necessary to maintain the checks and balances on accounting processes. This professional typically manages staff and oversees information systems.

Chief financial officer — Maintains a strategic understanding of the business and is responsible for financial planning and cash flow management.

Most business owners act as the controller or CFO during the early stages of growing their businesses. As revenue increases and time becomes more precious, they hire someone to take away the burden of managing the accounting, as well as other administrative responsibilities.

But a competent controller or CFO, who can command a salary of $60,000 to $100,000, may be beyond the budget of many growing businesses.

The options

In evaluating solutions, many business owners and top executives look at whom they need instead of what they need. As a result, they tend to overlook several sensible and workable solutions that can eliminate or minimize the need to hire additional management staff.

Consider the following possibilities:

Get your accounting firm more involved. Your CPA may be able to take a more active role in budgeting, planning and complex accounting transactions. Since these may only need to be addressed a few times a year, it might be more cost effective to use your CPA than to hire a full-time controller or CFO.

Outsource. Services now specialize in a multitude of accounting functions, including payroll, bookkeeping, billing and collections. Outsourcing means fewer people and less technology to manage, which eliminates some of the duties of a controller or CFO.

Hire part-time controllers and CFOs. The number of professionals offering these services continues to grow. From the consultant’s perspective, working with a multitude of clients is the best way to leverage experience. This is also attractive to those who would prefer to pay a premium for a few days of consulting than to hire a full-time person who might prove to be overqualified, underutilized or unduly expensive.

Change your hiring strategy. If your strength isn’t accounting and you need to hire a manager, consider adding a line manager with financial skills instead of a controller or CFO. Companies that outsource their accounting often can assign financial duties to a qualified operations or sales manager. Under this arrangement, the organization is better served by having a person who spends the majority of his or her time building revenue or servicing customers.

In the tight labor market, your business can’t afford staffing mistakes in accounting. The best hiring decision you make may be the one you avoid.

By closely evaluating all of your of your options, you can arrive at the right accounting solution for your business.

Thomas S. Joseph is president and CEO of Bookminders Inc., which provides specialized bookkeeping and other computer-driven accounting services. Reach him at (412) 323-2665.