As a growing direct to consumer (DTC) brand, are you still only working with an accountant?

Accountants are essential for a growing company. But if you really want to scale, it’s time to make sure you’re properly engaging a CFO (Chief Financial Officer).

No, not an accountant you hired and gave CFO duties.

In fact, hiring an accountant and expecting them to be a CFO is often a big mistake. We’ve seen it happen, and the results can be catastrophic for your business.

Why does it matter?

Too many people who call themselves CFOs are simply accountants.

While accountants are extremely important, they shouldn’t be confused with CFOs.

The difference in roles, when leveraged correctly, will help your DTC brand scale.

However, when the roles don’t work together, businesses can become stagnant and at risk of running out of cash.

It happens to even the most seasoned business owners, but with an accountant who works to keep you on track, and a CFO who provides the high-level strategy, your business can stay in the green.

So, how do you tell the difference?

Don't worry - we've got you.

Today, we’re going to teach you the difference between a CFO and an Accountant so you know how to find and leverage each of these key pros.

The result? You’ll be equipped to structure the finance team you need to scale your brand alongside healthy profit and cash flow.

Accountants: Guardians of Financial Accuracy

Accountants are the backbone of your financial operations. They are detail-oriented professionals who meticulously record, organize, and provide foundational analysis for your financial data.

Their expertise lies in:

Bookkeeping: Recording and reconciling transactions, ensuring every penny is accounted for.
Cash Management: Paying bills on time, collecting receivables, and managing cash flow effectively.
Internal Controls: Implementing systems to prevent fraud, errors, and misuse of funds.
Tax Preparation: Ensuring timely and accurate filing of tax returns, minimizing your tax liability.

With their fine-tooth-comb approach, accountants provide you with:

Historical Financial Statements: Detailed reports showcasing your past financial performance, allowing you to track trends and identify areas for improvement.
Compliance: Peace of mind knowing that your financial records are accurate, compliant with regulations, and ready for audits.

What about Bookkeepers?

Some businesses also hire a bookkeeper, whose role focuses solely on recording and reconciling transactions and basic data preparation. This is an essential role because it creates a solid foundation for a business’s financials.

When bookkeeping isn’t done correctly, it can cause you to make misinformed decisions, misunderstand what’s going on in your business, and run into a mess of problems, like:

An unclear sense of your margins (gross, contribution, operating, net income)
An incorrect balance sheet
Inaccurate inventory levels
Inaccurate accounts receivable or accounts payable levels

While bookkeepers keep all of the above in check, they typically don’t prepare reports or perform analyses in the detailed way accountants are trained.

They also don’t require any formal training or certification for their role, whereas some accountants pursue the very intensive CPA designation.

CFOs: The Strategic Navigators of Financial Growth

CFOs play a significantly more strategic role than accountants and bookkeepers.

Their focus is on the future and they use their financial expertise to drive your company's growth and profitability.

Consider them like financial navigators, charting a course toward long-term success.

Their responsibilities include:

Strategic Planning: They develop financial plans that align with your business goals so that your financial decisions support your vision.
Process Optimization: CFOs pinpoint gaps in financial processes and implement improvements to streamline operations and reduce costs.
Profit and Cash Flow Enhancement: They analyze data to spot opportunities to increase revenue, cut expenses, and optimize cash flow.
Team Building: CFOs can help you determine which roles you need to support company growth and help calculate break-even levels and hiring budgets.
Financial Forecasting and Budgeting: They create realistic financial models to anticipate future trends, assess risks, and make informed decisions.
Funding and Capital Structure: CFOs work to secure debt and equity financing to fuel growth initiatives and keep a healthy capital structure.
Mergers and Acquisitions: They spot and evaluate potential M&A opportunities to speed up growth and expand your market reach. They can help you prepare your business for an exit and deal with potential buyers.
Understanding Margins: CFOs provide detailed financial analysis and insights to maximize profitability at the gross margin, contribution before marketing and contribution after marketing levels.
Making Inventory Decisions: They analyze sales data and inventory metrics to keep optimal stock levels and improve cash flow management.
Scaling Ad Spend Decisions: Is it better to maximize ROAS or contribution dollars? What does each scenario look like? Which channels are most profitable to scale? CFOs can help answer these questions so you can allocate budget confidently.
Hiring an Agency: They help you decide on the cost/benefit decision of hiring an agency and can help manage them by setting budget and efficiency parameters.
Unit Economics: CFOs break down costs and revenues per unit to optimize pricing strategies and profitability.
New Product Launches: They provide financial projections and analysis to understand the impact of new product launches.

CFOs provide you with:

Forecasts and Budgets: Forward-looking financial models that help you anticipate challenges, seize opportunities, and plan for the future.
Strategic Guidance: Expert advice on financial decision-making that aligns your actions with your long-term vision.
Financial Leadership: A steady hand on the financial wheel, instilling confidence in stakeholders and driving your company's financial success.

The Power of Partnership: Accountants and CFOs Working Together

While accountants and CFOs have distinct roles, they are not mutually exclusive.

In fact, they form a powerful partnership that can propel your brand to new heights.

Accountants lay the groundwork by providing accurate and reliable financial data, while CFOs use this data to develop and implement strategic financial plans.

Free to Grow CFO: Your DTC Partner in Financial Success

At Free to Grow CFO, we understand the unique financial challenges faced by DTC brands.

Our team of experienced DTC accountants and CFOs is dedicated to helping you scale your business with confidence.

We offer a range of services tailored to your needs, including:

Ecommerce Bookkeeping/Accounting: Get timely, accurate, and insightful financial reporting that empowers you to make informed decisions.
Fractional CFO Services: Gain access to expert financial guidance and strategic leadership without the full-time salary commitment.

Whether you need assistance with day-to-day bookkeeping or strategic financial planning, Free to Grow CFO is your trusted partner.

Click here to book an intro call and let us help you build a financial team that can fuel your brand's growth and profitability.

The Difference Between an Accountant and a CFO