As a business owner, you make decisions every day that affect the future of your organization. Financial decisions are, arguably, the most important. As a result, many businesses employ controllers and CFOs to help steer them in the right direction and ensure the accuracy of their financial data.
Does your business need a CFO, or a controller – or both? First, you must understand the difference between a CFO and a controller. Understanding their roles and responsibilities can help you determine which one is right for your organization, or whether you may need both.
What is a Controller?
A controller is an executive who oversees and manages the company’s finances. For example, controllers serve as the head of accounting. They prepare financial reports (like income statements and balance sheets), take an active role in the budgeting process, perform internal audits and report monthly financial data. With larger organizations, controllers may also oversee payroll processing.
In most cases, controllers report to CFOs if the company has one. There may be some overlap in the responsibilities of a controller vs CFO, but generally, the CFO is one step above the controller.
Many people use the terms “controller” and “finance director” interchangeably. While similar, there is a difference between a controller vs. finance director.
- A controller is primarily responsible for making sure that financial reports are prepared for a company.
- A finance director plays a managerial role and oversees the finance professionals within the company.
What Are the Main Differences Between a Controller and a CFO?
So, what is the difference between a controller and a CFO? A CFO is also a senior-level executive who oversees the company’s finances. However, a CFO’s duties are more focused on planning, tracking, forecasting and analyzing.
A CFO’s duties can include:
- Tracking the company’s cash flow
- Identifying the company’s financial strengths and weaknesses
- Proposing corrective strategies
- Assisting with stakeholder management
- Overseeing or assisting with an acquisition or exit strategies
Additionally, CFOs must follow regulations, including the Sarbanes-Oxley Act, which includes financial disclosure and fraud prevention provisions.
In a way, CFOs are the visionaries in a company’s financial department. Controllers are the planners.
CFOs have the unique ability to think outside of the box and find solutions to improve the company’s financial strength, but they lack the discipline of a controller. Controllers have the discipline, but they lack that visionary quality that allows CFOs to come up with innovative financial strategies.
So, the primary difference between a controller and CFO comes down to strategy and planning. Controllers are planners. CFOs are strategists.
It’s more common for a business to have a controller than a CFO. According to the Controllers Council, controllers make up 75% of the financial leaders worldwide.
Who Does The Business Owner Hire: VCFO Or Controller?
There’s a lot of overlap between the roles of a financial controller vs CFO. For this reason, some businesses hire one or the other. However, most organizations need both. Which one is right for your business?
When to Hire a Controller
You may want to hire a controller if you need:
- To take a hands-off approach to accounting. As a business owner, your efforts are best focused on running your operation. Accounting is complex, and a controller can take on the burden of overseeing your accountant or bookkeeper.
- To ensure the accuracy of your financial reports. A bookkeeper may not be able to identify inaccuracies in numbers. A controller can help. Accurate financial reports are essential for any growing and successful business.
- Competent verification and supervision of accountants and bookkeepers. If you don’t have a CFO or the time to oversee your bookkeeping, a controller can take on that role.
- A professional to assist your CPA during tax season. A controller can provide ample support to a CPA during tax season. Bookkeepers have a limited capacity to offer such assistance.
- Someone to oversee the closings of financial periods. Bookkeepers often struggle to complete financial closing processes on time. A controller can assist with and oversee closings to ensure they are on time.
- To implement stronger processes to prevent fraud, errors and security breaches. Controllers have the skill and experience to implement internal controls that help reduce the risk of errors, fraud and security breaches.
When to Hire a VCFO
You may want to hire a VCFO if:
- Your organization needs help with cash shortfalls. A CFO can assist with and support fundraising efforts or help you understand weaknesses that are costing your organization money. CFOs can help you overcome cash shortfalls and better manage your cash flow.
- You want to develop a solid financial strategy for your organization. CFOs often act as strategists, and their planning can help with long-term projections or pricing decisions. In addition, as part of the executive team, CFOs usually take charge of essential planning processes.
- You rely on high-level financial analysis and reports when making company decisions. CFOs have a keen ability to not only see the numbers, but also to determine what these numbers mean and which metrics are the most important. As a result, CFOs can help you better understand your financial situation and how to leverage your strengths or improve your weaknesses to create a positive impact.
- You want to improve relationships with lenders and stakeholders. Lenders and stakeholders want to see solid, reliable financial data that’s packaged in a useful, easy-to-understand way. A CFO can help improve your relationships with investors and lenders because they can prepare these materials for board meetings.
Depending on the size of your organization and your needs, you may find that you need both a CFO and a controller.
Understanding the difference between a CFO vs. controller can help you determine which financial professional is right for your business – or whether you need both.
In either case, CFOs and controllers can help:
- Free up your time, so that you can focus on running your business.
- Ensure your financial reports are accurate.
- Supervise and oversee bookkeepers or your accounting department.
These financial professionals can also give you peace of mind that your company’s finances are in good hands.