What is the difference between a controller and a CFO? And, what factors should determine which of these two roles a business should add to its financial management team? The two financial leadership roles—Controller and CFO—are not the same, and neither are the same as the role of an accountant. The term “Controller” refers to a specific set of financial and management duties, whereas "CFO" refers to a very different and broad range of strategic, technical, and leadership responsibilities.
How Do Controller and CFO Roles Become Confused?
Businesses of a certain size often use the titles “Controller” and “CFO” interchangeably, because their needs lead them to blend some elements from the respective lists of responsibilities for the two roles into one job description. The appropriate title can become unclear. Although these smaller, but perhaps growing companies do combine the roles, having one person serving in both positions, the job descriptions for the two are very different. But, can one individual can serve in both roles simultaneously?
If your business grows to a significant size and is planning to continue growing, at some point you will need both a CFO and a controller. At that critical point when a CFO becomes necessary, a controller who has been fulfilling certain limited parts of the CFO role may not necessarily be equipped with the kind of expertise, or ever have the abilities that would qualify him/her for a role as a full-fledged CFO.
A financial controller is an accounting professional who performs reviews of clients' account balance statements, budgeting, financial analysis, and other accounting department management functions. An accounting controller performs the following duties, among others:
- Conducts Accounting and Reporting
- Interprets Financial Reports
- Helps Manage Cash Flow
- Coordinates Accounting Department Systems with Others (to ensure smooth information flow)
- Helps Prepare Internal Financial Reports (monthly and yearly)
- Provides Accurate Financial Reporting
- Provides Real-time Reporting
- Supervises the Bookkeeper
- Performs Budgeting
- Manages Compliance
- Tactical Planning
- Ensures Maintenance of Financial Department IS
- Answers Questions About Current Department Functions
When Does Your Company Need A Controller?
The controller position is one of high responsibility and job pressure. It is a relatively high-paying job in medium-sized companies. It can be difficult to find an ideally qualified person for this position. Whether you have an in-house controller, or your company is of a size that it makes more sense to outsource your controller services, having a controller gives you more control of your company. With a controller:
- All of your business's financial data, reports, and accurate analyses are accessible to you with just a few mouse clicks.
- Your company's financial records are accurate and are kept up-to-date, so that you can make business decisions, fully equipped with thorough current information about your financial position.
- You are enabled to make predictions, projections, adjustments, and set objectives and goals based on real information. You are not caught up in a mode of operating by merely reacting to circumstances as they emerge.
- As your business grows, you find yourself with a larger staff, with each new team member helping the company run more efficiently and smoothly. In your financial department, especially when you enter the range of 50 to 100 employees, controller services can make functioning much smoother and more efficient. And, you gain greater control of your employees' work in that department, through your controller.
Your controller works along with and supervises your bookkeeper and other accounting employees. The controller provides you with analysis of all of your financial reports, to help you understand the real-world application of your financial data to generate information about your business. Without a controller, you find yourself tasked with studying and analyzing your balance sheets, P&L reports, and financial forecasts to understand what they're reflecting about your business.
Instead, of course, you need to be in a position to readily know what your financial data and reports mean, so you can apply informed insights from thoroughly analyzed data to operate your business and to make the best financial decisions for it. Having a controller to do the financial analytic work for you, in addition to carefully managing all of your company's accounting functions, allows you to run your business without personally performing the job functions of a controller.
Chief Financial Officer (CFO)
A CFO may work on behalf of your business with banks, venture capital investors, insurers, valuations experts and other professionals outside your company. The CFO may also develop strategies for mergers and acquisitions, and formulate exit plans, as well as performing in a number of other highly specialized areas of financial and business leadership activities. Generally, a CFO fulfills responsibilities including:
- Oversight of Financial Department
- Analysis and Solutions
- Financing and Forecasting
- Interpreting Key Indicators
- Planning and Implementing
- Coaching Financial Managers
- Optimizing Interdepartmental Compatibility
- Big-Picture Future Vision
- Financial Strategy Development
- Finance Functions Focus and Innovation
- Answers Questions About Financial Strategy
How To Retain The Right CFO?
Although a CFO must be highly adept at accounting and financial reporting, as fundamentals, spending years as a controller cannot qualify an employee for a position as CFO. The skill set of a CFO is much broader and should include a strong track record of success in leadership of the kinds that can significantly advance comprehensive strategic business goals. With a CFO:
- You have a professional on your team who has a deep understanding of your business and the interrelations of its financial and operational systems.
- A professional in managing capital structures, business funding, and cash flow is focused on mitigating both financial and non-financial business risks for your company.
- You have an administrative team member who sees the big picture, and is working with you on formulating the best informed business and financial strategy.
- Your team of operating chiefs has a decision-maker and an effective communicator with his/her thumb on the pulse of your company's financial well-being and future opportunities.