Sunday, July 24, 2011

7 Key Differences Between a CPA and a CFO

You're flying along, running your business, thinking you're making money. And then something happens -- all of a sudden, cash is a problem and you're worrying about making payroll. What happened?

Usually, it's because you didn't understand your financials. Not just your Income Statement (Profit and Loss), but that other nasty part of your financials, your Balance Sheet. I'm working through this problem with a business owner who thought someone else was watching his back. Who did he think that was? His CPA.


In my business coaching practice, I generally find myself drilling into a client's financials, asking questions like "What's this item?", "Why did you book it that way?", "Why is gross margin % bouncing around month-to-month like a random number generator?", "Where's your company car on the balance sheet?", "And where's the loan for it?"

As I explain why those things are important (like you might want to borrow money or bring in an investor or sell your company some day), it's almost predictable that the client will ask, "Why hasn't my CPA ever asked me any of this stuff?"

Or perhaps you've approached a bank (or 4 or 5) for a loan, and after they look at your financials (sometimes quizzically, while looking at you over the tops of their reading glasses) they suddenly seem disinterested. You may have interpreted that as weak net income. It's just as likely that your financials just don't make sense.

So, here are 7 Ways a CPA is not a CFO.

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Terry Weaver

Chief Executive Boards International

Chief Executive Boards International: Freedom for business owners & CEOs -- Less Work, More Money, More Freedom to enjoy it 

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