How Accounting Roles Build a Stronger Business: From Clerical to CFO

Over the course of my 20 years as a CPA, one question that consistently comes up when discussing my work is: What does an accounting professional actually do?

The truth is, “accounting professional” is really a blanket term for many different roles that may make up the financial department of a given organization. Let me attempt to shed some light.

Level 1 Accounting

Common Roles in this Category:

• Accounting Clerk
• Salesperson
• Bookkeeper

The beginning of any accounting system is the data entry or clerical point. There are many different entry points for data into your accounting system. Retail companies may use information from their point of sales system to begin the information gathering and tracking process. Accounting clerks opening the mail and recording the bills and depositing the checks received will also be part of the information recording system. The salesperson recording their sales orders and invoicing their customers will also add to the information flow at this level. The front desk receptionist who receives payment for services processes payments for customers as they interact with your business.

There are many different ways to complete the tasks necessary to bill customers, receive payments and pay bills. Often companies use systems that the person who is sitting in front of the customer creates or that the salesperson creates to complete the sale that they have made. The professionals within this 1st Level are competent at completing transactions, but do not necessarily have any big picture insight or understanding of the organization’s financials.

Level 2 Accounting

Common Roles in this Category:

• Full Charge Bookkeeper
• Accountant
• Comptroller

Facing and planning for errors is part of a well-designed accounting system. We all know that everyone makes mistakes. We know this fact, but we often do not build into our systems a way to double-check information or find errors. The 2nd Level of accounting knowledge often fills this role.

This level of reviewing and systematically analyzing information is critical to maintaining accounting records that are useful and dependable: bank reconciliations, credit card reconciliations, comparisons to vendor statements and reports that double-check areas to be sure nothing is missed such as outstanding sales orders, outstanding purchase orders or other reports.

Designing a great accounting system that has built-in double-checks and internal controls is not simple. It takes planning and consistent effort to monitor and keep up to date. But it is critical and necessary to the goal of an accounting system that is fully functioning and offers the competitive advantage for the business that is possible.

Many people who call themselves bookkeepers do not understand the necessity of this layer of accounting system design and control.

Often, people who are in the role of bookkeeper do not understand how to complete this function thoroughly and the owner or person they report to does not know how to monitor this role or train the person to complete necessary tasks. For someone to effectively fill this role, they must have a deep knowledge and understanding of how the information should look. They need to be able to do a gut check and spot errors or abnormalities in the information. Having a system that brings errors to light is important and desirable, but the person in this role must know enough to spot errors intuitively, as well.

Level 3 Accounting

Common Roles in this Category:

• Chief Financial Officer
• Finance Director

Reviewing information to gain strategy level insight is the crux of Level 3 accounting functions. This is where the magic happens. When you have a high performing accounting system that will provide accurate, timely and versatile information, you have an accounting system that is a competitive advantage.

This information allows you to look at your business from many angles. You can run “what-if” scenarios simply and accurately. The power of this is impossible to quantify. Imagine sitting in a meeting with your executive team, you are brainstorming ideas about the next growth area of your business and you have a model in place to plug in numbers to estimate how the bottom line will be affected.

You can see bottlenecks in your system. You have insight into how growth will affect your cash flow. You can analyze your current business model and experiment with tweaks to improve and build it.

In a business that I was previously a part of, when the executive team got together to discuss strategy and analyze the information, it was obvious that the model we were operating under had some flaws. When we increased revenue and increased the costs that we know were tied directly to the revenue in our current model, the net profit did not increase in proportion to the increased risk and management burden. It was clear that our choice was to not increase revenue or to change the model—a choice that was made clear because of the effective accounting system in place and the leadership of a competent Level 3 accounting professional.

Understanding the three levels of accounting—data entry, system control, and strategic leadership—helps clarify the roles of professionals within your financial operations. Each level contributes something unique to the organization, from foundational tasks to error-checking and high-level decision-making. When these levels are aligned and operating effectively, they transform accounting from a back-office necessity into a strategic tool for growth and adaptability.