Accountant or CFO?

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In budget planning workshops that we organize, one of the tasks we give to students has to do with cost optimization. We take a virtual company’s results, (very poor in terms of profit), and try to find ways to cut costs. The students usually quickly come to understand that the company has an inadequate amount of staff, too many administrative personnel; they then offer various ways to cut the costs.

It is interesting that each group usually offers a solution that is somehow different than other groups, sometimes with very unique ideas. But the main discussion is always around which positions to merge and how large the salary decrease should be.

Quite often it is recommended that the company merge the CFO with the chief accountant:
“What’s the problem, they both work in finance – let’s merge them and fire the CFO. Let the accountant take care of financial planning as well”.
Wrong.

 

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AG Capital has had a chance to communicate with various types of accountants – professional and not so much, experienced to beginners, polished to rough. Regardless of the differences, the main personal quality that distinguishes a good accountant is attention to detail. Good accountants pay close attention to the smallest details of business processes, documents, etc. since their work is also heavily regulated.

 

 

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On the other hand, the main personality trait of a good CFO is the ability to see the big picture. You can either be good at seeing the big picture or at looking at details – it’s not just refocusing, it’s the whole of someone’s life experience that determines his or her strengths and weaknesses.

 

 

When a detail-oriented person, (an accountant), is asked to see the big picture, some very interesting things may happen. Once, we were doing a project for a manufacturing company with a retail outlet by their factory. The outlet made a very small percentage of sales so we just needed to predict its total sales by month. When we asked the client’s accountant to give me approximate numbers for sales, her answer was that it is impossible to predict. “One day people may come and we have good sales but the next day it’s raining and sales are bad. It’s just impossible to predict!”

Then we asked her for monthly sales figures for the previous months. And guess what the results were? For each of the 5 previous months – $10005, $9850, $10100, $9990 and $10250 per month respectively (the amounts changed but you can see how small the variance was). For a person with a big picture view it was easy to make an estimation of $10,000 per month.

So, if you have to make a choice – get a good accountant and a good CFO. Don’t attempt to combine the 2 jobs.

P.S. We’d probably be not very good accountants either.

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