Controller vs CFO | Focused Energy Outsourced Financial Team

Controller or CFO: Which is Right for Your Business?

A business has two financial leadership roles: controller and CFO. They are not the same, yet can each bring value and critical insight to the job.

If you are considering hiring a chief financial officer (CFO) or controller, or both, as a financial leader in your organization it is important to understand each role, the differences, and which may be right for your business.

The differences between a CFO and controller

At their core, a CFO is a senior executive whose responsibility is managing everything related to finance in a company and how it interrelates to operations. On the other hand, a controller is a senior-level executive who acts as the head of accounting while overseeing the day-to-day operations relating to finance is executed and run properly.

If you need insight into the difference between a CFO and a controller, you need to focus on the roles they play in a work environment.

CFO responsibilities

A CFO will assume a more operational focus when it comes to financial management within an organization. The roles of such professionals include;

  • Interpret financial metrics and determine actions to benefit company.
  • Develop optimal financial and tax strategies.
  • Advise CEO and business owners on trends and best practices.
  • Managing processes in a bid to ensure the utmost efficiency.

Business owners prioritize company vision and strategic planning for growth, operational process improvement, and profitability for their entities to respond accordingly to the current environment. The missing element here is someone capable of turning numbers into meaning and one that can paint a picture of how the future vision translates into a financial model. That is where a CFO comes in handy.

Controller responsibilities

Also known as an accounting manager, a controller tends to be more of a technical professional rather than one who focuses on a firm's operations. That implies that such an individual will seek to ensure that your financial statements are accurate, complete and that the presentation of such records will be in line with GAAP guidelines.

So, a controller will prove a valuable resource within your enterprise if having a successful financial reporting function is part of your priorities. The roles of a financial controller include;

  • Supervise all accounting activities including monitoring cash flow, overseeing payroll, benefits, accounts receivable and other measures.
  • Provide accurate reports regarding the historical performance of an organization.
  • Stay ahead of technical accounting pronouncements to ensure accurate statements and compliance with laws and reporting requirements.

To oversimplify the key difference between the roles: a CFO is often involved in financial strategy, fundraising and advising, whereas a controller's responsibilities usually encompass more tactical accounting and cost-saving measures.  A good CFO should be able to influence efficiencies in the use of assets, pricing, employees and operations, and the optimum allocation of resources for profitability.

Related reading: how accurate reporting saved CPG company's strategic plan

Should you opt for a CFO or a controller?

If you are asking this question, give yourself a pat on the back. Not only does it mean you understand the value of accurate financial metrics to the success of your business, but it also means you're business is growing to a new level.

Many growing businesses outsource CPAs, controllers and CFOs to ensure candidates have the necessary background and experience. This also reduces the costs with hiring an internal team or executive that may only be needed for a fraction of the time.

When to consider hiring a CFO

  • Making investment decisions or allocating capital is part of your priorities.
  • When the current needs of your firm go beyond accounting records.
  • If you are undergoing transition such as a relocation, merger, or acquisition.
  • When your organization is experiencing low profitability.

When to consider hiring a controller

  • When financial management reporting is an area of concern.
  • If you are experiencing rapid growth and you need your accounting records to be in line with Generally Accepted Accounting Principles (GAAP).
  • When development of cash flow and budget forecasts is a necessity.
  • Your accounting team is growing.
  • Areas of spend are not producing great enough ROI (return on investment).
  • Your CFO is spending too much time on day-to-day tasks vs. strategy and planning.

Building a successful financial team

There are many reasons to consider beefing up a businesses' finance team. Whatever yours are, we're glad you're thinking about it, because, from our experience, most owners wait too long to get help.

Maintaining proper financial records and understanding them is paramount if you want to make savvy business decisions.  But not all organizations require full-time financial controllers or CFOs.

What if you could recruit talented people, continuously improving reporting and adding value to the business, at a fraction of the cost of a full-time executive salary? Financial consulting services like Focused Energy can provide part-time or virtual financial consultants to provide the expertise and skills you need, at the level your organization needs it.

We can help you decide which financial professionals are best suited to achieve your goals or what actions could potentially improve your profitability. Contact us for a free consultation and learn more about our financial and fractional CFO services.

We understand the financial and operational complexities for healthy businesses. Let us provide the insights, strategy and tools for your success.

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