By Karrie Jackson, CEO and Cofounder, Evermore Accounting & Coaching

A contractor called me in the spring and opened with, "I think I need a CFO." I asked what was happening. He said his books were nine months behind, and he had no idea if he was making money.

He did not need a CFO. He needed a bookkeeper, urgently, and a CFO conversation about eight months after that.

The two roles get used interchangeably, and they are not the same job. Hiring the wrong one is expensive in both directions, so let me lay out what each does.

What a bookkeeper does

A bookkeeper records what has already happened. Transactions get categorized, accounts get reconciled, invoices go out, bills get entered, payroll runs, sales tax gets filed.

The output is accurate history. At the end of the month, you can look at a profit and loss statement and trust that it reflects reality.

That sounds basic, and it is the foundation everything else stands on. You cannot make a good decision from bad data, and I would say roughly half the trades businesses that come to us are working from books that are somewhere between incomplete and actively misleading.

Signs you need bookkeeping help:

• You do not know your numbers until your tax return is prepared
• Your bank account is your only measure of how things are going
• Reconciliations are behind, or you are not sure what a reconciliation is
• You are doing this yourself at nine at night and it is the part of the week you dread
• Your accountant spends the first three weeks of tax season cleaning up before they can file

What a CFO does

A CFO looks forward. Where is the cash going to be in ninety days. Can we afford this hire. Should we buy or rent the machine. What is our real margin by job type and what should we stop doing. What does the bank need to see before they will lend to us. How do we structure the next twelve months.

The output is decisions, not reports.

A CFO uses the bookkeeper's work as a raw material. That is why the order matters. Bringing in strategic help while your underlying records are wrong just produces confident advice built on bad numbers, which is worse than no advice.

Signs you are ready for CFO level help:

• Your books are current and you trust them, but you still cannot answer "should I do this"
• Cash surprises you, even in months that looked fine on paper
• You are considering a significant hire, purchase, or expansion
• You want financing and are not sure how you look to a lender
• You are profitable on paper and broke in practice, and cannot explain the gap

The middle ground most trades businesses need

Here is the thing about small contractors. Almost nobody needs a full-time person in either seat.

A full-time bookkeeper in your office costs you a salary, payroll taxes, benefits, a desk, and software, whether you are slammed in July or dead in January. For most trades businesses doing under a few million, that is a lot of fixed cost for a role that does not require forty hours.

And a real CFO commands a salary that a company of your size cannot justify at all.

What most trades businesses need is accurate monthly bookkeeping plus a regular conversation about what the numbers mean. That is a fraction of a person in each role, and it is why the outsourced model fits this industry as well as it does.

The part that matters more than the title

Whichever you hire, ask whether they know your trade.

I say this constantly and it is not a sales line. A general bookkeeper who has never touched construction will categorize your job costs into a single expense bucket, book customer deposits as revenue, and hand you a profit and loss statement that is technically correct and completely useless for running a contracting business.

They are not doing anything wrong. They just do not know what questions you need to answer.

A landscaper and a diesel mechanic do not run their money the same way. Retainage, progress billing, job costing, equipment allocation, prevailing wage, and seasonal reserves are not general small business concepts. Somebody who has not lived in those numbers will miss them, and you will not find out until the year is over.

A reasonable sequence

If you are trying to figure out where you sit, here is the order I would suggest.

First, get current. Whatever is behind, get it caught up and reconciled. Nothing else works until this does.

Second, get job level visibility. Your reporting should tell you what each job or each job type earns, not just what the company earned. This is where most trades businesses find their first real money.

Third, get forward looking. Once you trust history, start using it to make decisions ahead of time instead of explaining results after the fact.

Most owners want to start at step three because that is the interesting part. I understand the impulse. But I have never seen it work in that order.

Where to start

Ask yourself one question. If I had to tell someone right now what I made last month, could I, and would I believe it?

If the answer is no that is your starting point, and it is a smaller project than you probably think.

If the answer is yes and you still feel like you are guessing about what to do next, then you are ready for a different conversation, and that is the one I enjoy most.