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If you're a business leader with a growing organization, it's likely you've asked the question, "What is a good accounting department structure for my company?" Evaluating the best way to structure your accounting department or finance department can feel like a daunting task with many factors to consider. The accounting department plays a critical role in the financial health and success of your company. How an accounting department is structured can have a significant impact on its efficiency, accuracy, and ability to provide valuable insights and support to other areas of your business.
In this blog post, we explore key accounting positions and responsibilities as well as accounting department structure best practices based on company size. We also discuss some of the key factors business leaders should consider when determining the best accounting department structure for their business and offer insights to help make the decision-making process a little easier.
Whether you're a small business owner or the CEO of a large corporation, this blog post and its accompanying infographics will provide valuable guidance to help you build a strong and effective accounting department that can help drive your business forward.
From managing budgets and cash flow to preparing financial statements and providing key insights into business performance, an accounting department is responsible for a wide range of tasks that help keep a company running smoothly. But what are the different positions within the accounting department, and what responsibilities do they have?
Below are the various positions that may exist within an accounting department, from entry-level roles like accounts payable and accounts receivable clerks to senior-level positions like accounting managers and CFOs. Together, these positions work together to create a strong and effective accounting team.
Let's explore these key accounting department positions:
A CFO manages the financial operations of a business entity, including overseeing financial planning, budgeting, accounting, reporting, and analyzing financial data to make strategic business decisions.
A controller oversees the accounting and financial operations of an entity, ensures compliance with accounting principles and regulations, and produces accurate financial statements. They also manage reporting, budgeting, and forecasting.
An accounting manager oversees the daily operations of an accounting department, including managing accounting staff, monitoring financial transactions, and ensuring that financial records are accurate and up to date. They often collaborate with other departments to identify areas for improvement or cost-saving opportunities.
A senior accountant oversees the accounting operations of a business entity, including preparing financial statements, maintaining general ledger accounts, reconciling bank statements, and ensuring compliance with accounting principles and regulations.
A financial analyst analyzes financial data, provides insights into an organization's financial performance, identifies areas for improvements, and helps to develop financial plans and budgets.
A financial consultant provides advice on a number of topics including (but not limited to) financial planning, budgeting, forecasting, and cash flow management. This role can be particularly useful for small or medium business looking to grow and expand their operations. Consider reaching out to a fully integrated financial services firm, such as Delap, to help with this role.
An AP clerk processes and records all vendor invoices, ensures timely payment of bills, and reconciles vendor statements.
An AR clerk processes customer invoices, records payments, and follows up on delinquent accounts.
A payroll administrator processes payroll for employees, including calculating and processing payroll taxes, managing employee benefits, and ensuring compliance with payroll regulations.
A tax specialist is responsible for managing a business entity's tax compliance, including managing tax audits and providing tax advice to the business.
A bookkeeper is responsible for day-to-day accounting operations of an entity, including recording financial transactions, maintaining general ledger accounts, reconciling bank statements, and ensuring compliance with accounting principles and regulations.
A VP of finance or finance director has a broad range of responsibilities, including financial planning and analysis, financial reporting, accounting and control, treasury and cash management, and risk management. In our experience, this role is commonly referred to as the controller or accounting manager, thus we have not included this role as a position in the structures noted below. Let us know if you have specific questions on this role!
Let's dive into the potential accounting department structures you can use based on the size of your business:
There are a lot of positions available to staff your accounting department. How do you choose which positions to hire for? During Delap's 90-year history, we've worked with myriad business clients across a wide variety of industries and seen many different accounting department structures. In our experience, successful finance teams have the following structures based on company revenue.
As your small business grows and your revenues increase, it is likely that your accounting needs will also grow in complexity.
If you lead a company where total revenues are $5 million or less, then the perfectly staffed accounting department would likely include:
The bookkeeper would take the reins in maintaining financial records, processing invoices, and reconciling bank statements. This role typically requires a high school diploma or equivalent and some relevant experience.
The AR and AP clerks would help with cash collections from customers and cash payments to vendors, respectively. Since each of these roles handle the inflows and outflows of cash from the company, we recommend employing two separate individuals for each role to attain proper segregation of duties and maintain healthy internal controls.
A separate payroll administrator is vital to your organization to process timely payments to employees, stay on top of the dynamic regulatory environment of imposed taxes, both locally and federally, and handle employee benefits.
A tax specialist and a financial consultant are beneficial to a company regardless of size, since their expertise can assist with complex tax situations or provide advice in financial planning. As a business leader, if you are experiencing unprecedented growth, or if you are looking to grow your business, these roles can provide insightful and helpful strategic direction.
If having a tax specialist and/or a financial consultant in your accounting department isn't feasible for your business, consider outsourcing the roles and utilizing your CPA firm for either role. Did you know that Delap has a Business Advisory Service Line that has access to individuals with years of experience in tax planning, tax compliance, strategic business planning, and succession planning? Depending on your business needs, we have a group of talented individuals who are excited to use their expertise to serve you and your company.
The larger your business, the more likely your accounting needs will grow in complexity, and you'll have to expand your accounting department by hiring new accounting positions.
If you lead a company where total revenues are between $5 and $25 million, then the typical accounting department structure would likely include:
A controller would provide the primary oversight of financial reporting and oversee the accounting and financial operations of the company. This role typically requires a bachelor's degree in accounting or finance and relevant experience.
But depending on the nature of your business, you may prefer to employ an accounting manager as the primary overseer of the accounting and financial operations of your company instead of a controller, with the next level being a senior accountant. For example, a company with significant revenues but simple operations will have less complex accounting requirements, and thus the company would be a good fit for this type of accounting department hierarchy.
The accounting manager or senior accountant would then oversee the staff accountants to ensure daily operations are running as intended. See below for the primary differences between a controller and an accounting manager and the primary differences between an accounting manager and a senior accountant to see which roles would best fit your company.
The staff accountants for a company with revenue between $5 – $25 million are the AR and AP clerks who would help with cash collections from customers and cash payments to vendors, respectively. As each of these roles handle the inflows and outflows of cash from the company, we recommend employing two separate individuals for each role to attain proper segregation of duties and maintain healthy internal controls.
Similar to a smaller business, a separate payroll administrator is vital to your organization to process timely payments to employees, stay on top of the dynamic regulatory environment of imposed taxes, and handle employee benefits.
As a small-to-medium sized business, you may find yourself with more complex financial operations that would warrant hiring an in-house tax specialist and/or financial analyst. These roles can help manage that complexity by ensuring consistent compliance with imposed tax laws as well as analyzing financial data and providing insights to help inform financial decisions.
We also recommend continuing to utilize a financial consultant. In addition to the number of services described for smaller businesses, a financial consultant can also help businesses of this size to develop risk management strategies and help implement risk mitigation measures related to credit risk, market risk, and operational risk; develop investment strategies and select appropriate investment vehicles; and evaluate financing options and develop a financing strategy that supports a company's growth objectives.
As a company's revenue grows and its accounting needs become even more complex, it becomes increasingly important to have a well-structured accounting department.
If you lead a company where total revenues are between $25 and $50 million, then the best accounting department structure likely includes:
A CFO manages the financial operations of a company and makes strategic business decisions based on data derived from the accounting and/or finance departments. Depending on the nature of your business, you may require that your CFO hold a Certified Public Accountant (CPA) license. A CPA license is important for a CFO to have because it provides a level of expertise and credibility in the field of accounting and finance. See the frequently asked questions below for more information on when it makes sense for your business to hire a CFO.
A controller would provide the primary oversight of financial reporting and oversee the accounting and financial operations of your company. Both the CFO and controller roles typically require a bachelor's degree in accounting or finance and relevant experience.
An accounting manager or senior accountant would then oversee the staff accountants to ensure daily operations are running as intended. As with a smaller company, this would include the AR and AP clerks and a separate payroll administrator.
A business of this size can continue to use a financial consultant for financial planning and analysis, risk management, investment management, and financing strategies. In addition to those services, businesses of this size may request their financial consultant to perform services related to complex tax planning, high-net-worth wealth advisory, succession planning, capital raising, and due diligence projects for potential mergers and acquisitions.
Have you been considering adding a Chief Financial Officer (CFO) to your team? Many business owners wonder when a CFO is needed, why a CFO is important, and how a CFO can add value to their organization.
A company may find that a CFO is a valuable addition to their accounting department in the following situations:
CFOs often have a CPA license, which brings valuable expertise, credibility, risk management, and more to a company. Here are a few perks of your CFO having a CPA license:
Still not sure if your company needs to hire a full-time in-house CFO? Delap offers Fractional CFO services. Learn more about how our team can provide the expertise necessary to accomplish your business's goals.
When it comes to managing a company's financial operations, two important positions come to mind — the CFO and the controller. While these titles may sound interchangeable, they serve distinct functions and have different responsibilities within an organization.
Responsibilities: CFOs are responsible for developing and implementing the company's overall financial strategy, including financial planning, analysis, and risk management. In contrast, controllers are responsible for managing the accounting operations of the company, including maintaining accurate financial records, preparing financial statements, managing the month-end close process, and ensuring compliance with accounting principles and regulations.
Focus: CFOs focus on the big picture, making strategic financial decisions that align with the company's overall goals and objectives. Controllers, on the other hand, focus on the details, ensuring that the company's financial records are accurate and compliant with accounting regulations.
External vs. Internal: CFOs typically work with external stakeholders, such as investors, lenders, and regulatory bodies, to ensure that the company is financially stable and compliant with regulations. In contrast, controllers primarily work with internal stakeholders, such as other departments within the company, to ensure that financial processes are running smoothly.
Qualifications: While both positions require a strong financial background, CFOs typically have a higher level of education and experience than controllers. CFOs are often required to have a master's degree in finance, accounting, or business administration and/or a CPA license, as well as several years of experience in financial management. Controllers, on the other hand, may have a bachelor's degree in accounting or finance and several years of experience in accounting or financial management.
The CFO and controller often work together in complementary ways to ensure the financial success of a company by leveraging their unique skills sets and collaborating on various financial matters.
For example, the controller provides the CFO with accurate financial statements, which the CFO can use to make informed decisions about the company's financial strategy. The controller may also work with the CFO to identify areas of financial risk and develop strategies to mitigate these risks. Additionally, the controller may assist the CFO in developing budgets and forecasts, providing financial data that the CFO can use to make informed decisions about the company's future financial direction.
Managing a small-to-medium-sized business's finances can be a complex and challenging task, requiring the expertise of multiple financial professionals. While a company of this size may not need to employ a CFO, two critical roles in an organization's accounting department are the controller and the accounting manager. Although these roles may appear similar at first glance, they are two separate positions with different responsibilities and skill sets.
Understanding the differences between a controller and an accounting manager is essential for companies to build an efficient financial team that can effectively manage their financial operations.
Scope of responsibility: Controllers typically have broader responsibilities than accounting managers, as they oversee all financial operations of a company or organization. Accounting managers, on the other hand, usually manage a specific area of the accounting department.
Leadership and management: Controllers usually have a more senior position and are responsible for managing accounting staff and providing leadership to the entire accounting team. Accounting managers may also manage staff, but their role is more focused on managing day-to-day accounting operations.
Strategic planning: Controllers are typically more involved in strategic financial planning, budgeting, and forecasting, while accounting managers are more focused on the operational aspects of accounting, such as bookkeeping, financial reporting, and reconciling accounts.
As a business leader, it's important to understand the differences between an accounting manager and a senior accountant within your accounting department.
Responsibilities: Senior accountants typically have more specialized responsibilities related to technical accounting, such as preparing financial statements, researching accounting standards, and performing complex accounting tasks. Accounting managers, on the other hand, have broader responsibilities that include managing the accounting department, setting accounting policies and procedures, and overseeing day-to-day accounting operations.
Leadership: Accounting managers have a more leadership-oriented role than senior accountants, as they are responsible for managing staff, providing guidance and direction, and setting priorities for the accounting team. Senior accountants may supervise the work of junior staff, but they are not typically responsible for managing the department as a whole.
Seniority: In the accounting department hierarchy, accounting managers are generally more senior than senior accountants, and they may report to the controller or CFO. Senior accountants are less senior may report to an accounting manager or directly to the controller.
Understanding the differences between the different accounting department job titles and positions is essential for optimizing your accounting team's performance. By identifying each role's unique responsibilities, you can develop a cohesive accounting team that can effectively manage your financial operations and support your company's success.
Need help remembering the nuances between accounting department positions? Download our Perfect Accounting Department infographic for free.
If you have questions about structuring your organization's accounting department, want to learn more about Fractional CFO services, need help recruiting a CFO or controller, or want to delve deeper into how a financial consultant can help propel your company to success, don't hesitate to reach out to our team.
Delap’s business advisors combine practical real-world experience and industry specialization to deliver tangible results to our clients, supplying you with a financial expert who can interpret your data and processes, provide strategies, and see beyond the numbers to drive your business forward.