The finance function in a small business: reliable figures and better decisions
Keep the figures right and use them to steer, with a mix of bookkeeper, accountant, controller and a fixed monthly review.
In this topic: Finance 12
Correct figures are where finance starts, not where it ends
The difference between the control and advice sides of finance, and how a small business builds both without a finance department.
In many established small businesses the finance function works as a compliance machine. The bookkeeper keeps up, the accountant files the annual accounts and tax returns on time, and the bank receives its figures. Yet when the owner asks which customers really make money, or whether the business can afford a second production line, nobody has the answer ready. The figures are correct, but they steer nothing.
A finance function, whoever performs it, has two jobs. Control keeps the numbers complete, correct and compliant. Advice turns those numbers into decisions. Large companies have departments for both; a business with ten to a hundred staff can cover them with a mix of people, software and a fixed meeting rhythm.
Even large organisations struggle with the balance. In a global survey of finance leaders at organisations with at least US$1 billion in revenue or assets, respondents said 47% of their capacity goes to operational tasks such as regulation, reporting and internal controls (source: EY, June 2026). Only 27% saw finance as a strategic partner in creating value (source: EY, June 2026). In a small business the owner usually fills the advice gap, or nobody does.
Control and advice: the two roles of the finance function
The control role
- Records: every transaction booked, bank and ledger accounts reconciled each month.
- Filings: tax returns, payroll returns and annual accounts on time.
- Approval rules: who may order, approve and pay, with no one doing all three.
- Asset checks: receivables, stock and cash compared with the books.
- Compliance: tax, company and employment law, plus loan covenants (the conditions a bank attaches to a loan).
The advice role
- Budget and variance: what differs from plan, and why.
- Cost price and margin: per product, service, customer and channel.
- Scenarios: what happens to profit and cash if volume, price or costs change.
- Cash forecasting: liquidity weeks and months ahead rather than today's balance.
- Benchmarking: margins and cost ratios against the industry.
Control has a widely used reference model. The Committee of Sponsoring Organizations of the Treadway Commission (COSO) frames internal control around objectives for operations, reporting and compliance in its Internal Control - Integrated Framework, first issued in 1992 and refreshed in 2013. For a small business the core of it is simple: separate duties, document approvals, and reconcile what the books say with what is actually there.
| Control | Advice | |
|---|---|---|
| Question it answers | Are the figures right, and are we compliant? | What should we do next? |
| Time focus | The period just closed | The coming months and years |
| Typical output | Ledger, reconciliations, returns, annual accounts | Dashboard, forecast, margin analysis, investment case |
| Cost of neglecting it | Penalties, fraud, a bank that loses trust | Late decisions, margin leaking away, cash surprises |
Who does what in a small business finance function?
| Role | Delivers | Typical form in a small business |
|---|---|---|
| Owner or managing director | Decisions, payment approval, ownership of the budget | Always in-house; cannot be outsourced |
| Bookkeeper | Daily processing, reconciliations, VAT and payroll input | Part-time employee or external firm |
| External accountant | Annual accounts, tax returns, technical advice, audit or review where required | Annual or quarterly contact |
| Controller | Monthly close, management reports, budget, internal controls | Part-time or interim |
| Part-time CFO | Financial strategy, financing, bank and investor relations, large investments | A few days a month, often during growth or a financing round |
The smaller the business, the more of these roles sit with the owner. That works as long as the owner keeps the analysis and the decisions, even when processing is outsourced. A statutory audit is a separate question: the UK, for example, exempts private companies that meet at least two of three size criteria, but shareholders can still demand an audit (source: GOV.UK, October 2026). Lenders and investors may ask for one too.
What the advice role delivers: an example
Henrik owns Ferro Metalworks, a metal fabricator with 26 staff and revenue of €4.2 million. Over a year the gross margin slid from 33% to 30.6%. The annual accounts showed the lower profit but not the reason. A part-time controller, two days a month, split the margin by customer group:
| Customer group | Revenue | Gross margin | Margin % |
|---|---|---|---|
| Industrial contracts | €2,300,000 | €782,000 | 34.0% |
| Architectural projects | €1,400,000 | €392,000 | 28.0% |
| Repairs and small jobs | €500,000 | €110,000 | 22.0% |
| Total | €4,200,000 | €1,284,000 | 30.6% |
Fictitious Firmfocus example. Volumes are assumed unchanged after the measures; the controller is assumed to cost €2,400 a month. The logic works in any currency.
Small jobs carried set-up time and travel that the price list had never reflected, and architectural quotes used steel prices that were months old. Henrik introduced a minimum charge for small jobs, which lifts their margin to 30%, worth €40,000 a year. Checking every architectural quote against current material prices adds two points there, worth €28,000. Together that is €68,000 more gross margin a year, bringing the total back to 32.2%, against a controller who costs €28,800 a year. The figures had been in the books all along; nobody had looked at them per customer group. Activity-based costing takes this analysis a step further.
How to strengthen your finance function in four steps
- 01
Get the basis right
Current books, a monthly close on a fixed working day, approval rules in writing and duties split between at least two people. See bookkeeping and records.
- 02
Choose a handful of key figures
Revenue, gross margin, overheads, debtor days (how long customers take to pay) and the cash position with a forecast, on one page each month. The KPI dashboard page explains how to build it.
- 03
Compare with budget and industry
Set the budget in the Business Planner and compare your margins in the profit and cost benchmark. Financial analysis explains which ratios matter.
- 04
Hold a fixed figures meeting
Monthly, or at least quarterly, with your bookkeeper, accountant or controller. Three questions: what happened, why, and what do we do now. Record actions with a name and a date.
When to add a bookkeeper, controller or part-time CFO
A dashboard is only as reliable as the close behind it, so strengthen control before you add advice. These signals tell you what to add next:
- You approve payments you have not checked: a bookkeeper or a second pair of eyes.
- Monthly figures arrive after mid-month: a controller or a firm with a fixed closing date.
- The bank asks for covenants or quarterly reports: a controller who owns the reporting.
- A large investment, acquisition, financing round or sale is coming: a part-time CFO for the project.
- Several companies or currencies: consolidation and checks on balances between the companies; see exchange rates and currency risk.
Small business or larger business
Up to about ten staff
Owner, an external bookkeeper and an accountant. The owner reviews a one-page dashboard from the accounting software each month and meets the accountant every quarter, with next quarter on the agenda as well as last year.
Several dozen staff or more
An in-house bookkeeper or finance assistant, a part-time or interim controller for the monthly close and reporting, the accountant for year end and tax, and a part-time CFO for financing and major decisions.
Pitfalls
- Confusing timely with useful: accounts filed on time say nothing about next quarter.
- Outsourcing the analysis with the processing: the owner must keep the questions and the decisions.
- One person entering, approving and paying: the classic route to errors and fraud.
- Too many figures: thirty charts and no decision.
- Senior help for routine work: a part-time CFO is an expensive way to reconcile bank accounts.
A stronger finance function pays off fastest in margins and costs; see reduce costs and improve profit. All finance topics are in Finance, part of the knowledge base.
What is the difference between a bookkeeper and a controller?
Does a small business need a controller or CFO?
Which figures should I review every month?
Why compare my figures with my industry?
Sources
- EY: Global DNA of the CFO Survey (June 2026)
- COSO: Internal Control - Integrated Framework (2013)
- GOV.UK: Audit exemptions for private limited companies (October 2026)
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