The economic wealth of a firm is vital to any entrepreneur. Developing a team that may help you make sound business decisions is essential no matter what phase your firm is in. With so many professionals around, including auditors, CPAs, chief financial officers (CFOs), and controllers, it’s not always obvious who to recruit to cover the needs. In this blog, we’ll speak about the distinctions between CFO vs. controller and assist you in deciding which position is critical in different situations.
The definition of a controller
It is a specialist who handles the financial procedures of the firm. The individual supervises the precision and clarity of bookkeeping and accountants’ routine actions.
In most situations, the controller is a senior manager who can interact with numbers and has a university degree in bookkeeping. His direct boss is the CFO or top management; the worker observes staff specialists’ effectiveness.
Basic duties of the specialist
In essence, controllers are accounting geniuses. They observe the completion of financial documents, on which the company’s further development depends, and establish internal controls. At the macro level, such a specialist may participate in forming and adopting the enterprise’s tactic. Depending on the aims of the enterprise, the controller may perform the next kinds of jobs:
- preparation of monthly financial papers,
- supervising the performance of bookkeeping staff,
- making a budget,
- inspecting bank accounts and cash flow,
- collection and processing of financial insights,
- checking the company’s budget to avoid mistakes,
- assisting the organization in meeting tax and licensing directives.
In enterprises with a large team of specialists, the controller often makes recommendations to the financial director, especially in matters related to accounting directives, tax system features, etc.
Keeping proper financial records is time-intensive and small mistakes can be costly. BooksTime makes sure your numbers are 100% accurate so you can focus on growing your business.
The definition of CFO
The CFO must create and supervise adopting the firm’s overall economic strategy. His area of interest includes the research of general market situations, studying competitors, and estimating capital. The CFO monitors all commerce performance, including historical data and forward-looking activities, e.g., budgeting, forecasting, analysis of investment opportunities, etc. These consultants are the most influential advisers to all CEOs.
Primary duties of the CFO
In the past few years, the post of the CFO has changed a lot, and now the professionals in this position successfully manage the company`s price policy and plan capital structure. Their daily responsibilities also include the next:
- counseling the CEO, executive committee, and employees on different economic and productional matters;
- confirmation of financial statements;
- monitoring of all transactions;
- controlling treasury performance, e.g., investment, obligations, and equity contracts;
- creation of plans to increment earnings;
- improving risk management, including assurance, swindling, and cybercrime tracking;
- educating specialists;
- monitoring and implementing of modern technologies, etc.
Such a comprehensive view of things suggests CFOs are rarely restricted to dealing with banknotes. Most proficients are successful in fields beyond bookkeeping, such as defining strategic partners, evaluating techniques used, and presenting the firm at different events.
Similarities and distinctions between a controller and a CFO
CFO vs. controller is actively engaged in daily financial operations and business planning. They both help companies maintain profits or at least manage their debt if enterprises operate at a loss in the short run. Although controllers and CFOs have some similar characteristics, their operation differs in many ways. Let’s talk about this in more detail.
Bookkeeping and finance
Because controllers are bookkeeping proficients, they must guide GAAP and tax standards. They are careful and technically savvy professionals. In most situations, controllers are CPAs, while CFOs handle broader financial matters, including forecasting, capital market research, and investing.
CFOs need to comprehend the key elements of accounting, but they do not need a CPA degree. Such executives may have different work experiences, from investing to managing companies.
A financial officer’s job involves more responsibility than a controller, who monitors the precision of displaying all firm steps. The CFO employs this data and information from other groups that impact the firm. Controllers are responsible for the correctness and clarity of business papers, while CFOs check every financial decision the enterprise makes.
Tactics or strategy?
Supervisors are tactical employees who must strictly follow instructions and adhere to approved deadlines. Their area of responsibility is restricted, e.g., payroll and capital structure control. CFOs are solving more global problems, forming a tactic that determines the path of the organization’s development. He may advise business founders on guaranteeing the company’s short and long-term prosperity.
Demanded attainments and personal qualities
The controller should be attentive to details and have excellent mathematical ability. He must be able to interact with Microsoft Office platforms, accounting, and branch applications, e.g., QuickBooks and ERP software. Such professionals should be familiar with all standard bookkeeping and area regulations. In terms of personal qualities include the ability to build good relationships with people, think critically, and take the initiative.
When it comes to a financial director, he should have almost the same experience as a controller; therefore, many entrepreneurs wonder if they need to recruit both specialists. However, the CFO should have practice in generating and adopting non-standard ideas besides technical attainments.
They should also have talent in economic planning, risks minimization, and problem identifying and solving. It is excellent if CFOs comprehend how to attract capital and have practice in launching firms.
Without a controller in the firm, the accounting department may miss several opportunities; the CFO must also work overtime to collect the necessary data to make a rational decision. Simultaneously, in the absence of a CFO, it is difficult for an owner to see the complete picture of enterprise productivity and make accurate predictions.
The CFO is slightly lower than the CEO in the pecking order; the controller reports to the manager of the economic department.
What is an optimal moment to onboard a controller?
You can start dealing with a specialist anytime, but cooperation with such a specialist is a priority for large firms with specific financial needs. It is also critical to comprehend the phase of development of your enterprise. If you own a startup, you do not need a whole-time expert, but you should consider recruiting one as your market share grows. You must understand what problems the controller help solve:
- Keeping accountants tracked: if you’re not hiring a CFO and don’t have the knowledge to track accounting, tracking can help with this task.
- CPA assistance: during a tax period or when undergoing an audit, regular accountants may not have the experience to support a CPA.
- Control the correctness of financial documents: a specialist will help if your employees cannot determine at what step a fault in financial data occurred. He will also tell you how to prevent any violations.
- Solving problems related to closing and reporting: papers closure can be too complicated for accountants. The financial controller will help you complete reporting quickly and painlessly.
You should not hire a professional and expect him to act as CFO. Many professionals do not have the practice to determine the firm’s financial position, identify problems and represent the company’s interests in negotiations.
Best time to begin interacting with CFO
For small and mid-size enterprises (SMEs), the issue of when to recruit a CFO can be tricky. Such an expert provides valuable data in commercial planning and management. If an organization rapidly grows or interacts with complicated financial platforms, the CFO may become a great employee; a micro business should wait for the company’s expansion before recruiting a specialist. Let’s analyze several situations where the efforts of a financial director can bring maximum benefit:
- Tracking the finance branch’s work: if an entrepreneur does not have the free hours or knowledge to drive the action of the economics department, an optimal variant is to entrust these objectives to the CFO.
- Determining critical goals: the CFO assists the entrepreneur with various economic programs, including optimal pricing, large purchases, and long-term forecasting.
- Need for sophisticated analysis: if the CEO is having difficulty interpreting the data correctly, he needs a reliable assistant. The CFO is an expert who understands each number in the report and can give advice based on financial insights.
- Capital raising assistance: when an organization needs to grow funds, the CFO can take on the liability of negotiating with investors and lenders and forming the necessary reporting packages.
If you’re still in doubt about whether or not to seek the assistance of a CFO, ask yourself if you have the time to do tactical planning. The CFO may free up your hours by concentrating on the business’s economic processes so you can do other essential tasks.
Choosing between CFO vs controller may not be necessary if you outsource their duties when building a reliable back office. Organizations that have delegated financial procedures to an outsourcing company get access to all the attainments and experience of qualified specialists any time. Moreover, owners don’t need to pay for full-time specialists or engage in the lengthy and costly process of staff expanding.
With Bookstime’s advanced financial services, entrepreneurs may enjoy the entire profits of a reliable, functional back office by paying only for the needed services. As the business enlarges, the list of accounting services also expands.
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Author: Charles Lutwidge