Controller vs CFO: 3 Key Differences

Though the Chief Financial Officer (CFO) and the financial controller work closely together, they have significantly different roles within a company. The biggest distinctions can best be described by breaking down the operations and responsibilities of each role. In this article, we’ll look at the three key differences between these positions. We’ll address their scope, daily responsibilities, and hierarchy to help give you a better understanding of how CFOs and controllers impact your company.

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Scope of Roles

CFO: The Strategizer

The CFO is the finance leader and chief financial strategist of a company. CFOs play a significant role in laying out the direction for a company’s future and advising stakeholders on important business decisions. Chief Financial Officers identify business risks by looking at financial data and make appropriate decisions to mitigate those risks, among their many leadership functions.

The CFO and CEO collaborate to make a case, based on the CEO’s vision and the CFO’s data, to get company-wide buy-in for changes in direction and new ideas. It is the CFO’s strategic leadership that steers the company in the right financial direction while holding departments that are tangential to the accounting and finance department accountable for the implementation and execution of the new direction.

Controller: The Tactician

The controller carries out the implementation and day-to-day management of the operations of the accounting department. The work that they do can be referred to as controller services. The controller’s oversight and account management enable the CFO to meet the company’s strategic goals. A good financial controller will develop efficient and effective strategies to increase profit margins, increase employee productivity, and find cost savings through cash management.

A controller is one of the most influential people within your company’s accounting and finance department. They can benefit your company by providing a balance of financial expertise and accounting services management that bridges the communication between C-suite and day to day functionality of the accounting department.

Read More: Benefits of a Part-Time CFO.

Daily Responsibilities: Management vs. Forecasting

Although both CFO and controller roles oversee the financial aspects of the company, they have very different day-to-day responsibilities. Here’s a look at the difference between the two:

What are the Daily Responsibilities of a Controller?

A financial controller has four tiers of accountability, each with its own set of responsibilities. These include:

Management

• Implementing and maintaining accounting procedures, processes, and policies
• Supervising all accounting department operations
• Overseeing control of accounting within subsidiary companies
• Ensuring the integrity of all accounting functions
• Providing job training and mentoring to the accounting department

Transactions

• Maintaining an up-to-date data storage system
• Ensuring accounts payable and receivable are on time
• Ensuring payroll is on time
• Supervising bank reconciliations
• Keeping an updated chart of accounts

Reporting

• Preparing relevant and timely financial reports
• Preparing the company’s annual budget and annual report
• Suggesting ways to improve company performance
• Generating and reporting financial operating metrics
• Reporting budget variances to management
• Generating analysis for financial management decisions

Compliance

• Monitoring debts and compliance
• Providing information to external auditors
• Providing financial information for tax filing
• Facilitation of tax information to your CPA
• Providing financial information to company executives
• Assisting the finance team with financial decisions
• Helping the accounting team with cash flow management

What are the Daily Responsibilities of a Chief Financial Officer (CFO)?

A CFO is less directly involved in the accounting department’s day-to-day accounting operations compared to the controller. The tiers of accountability that a CFO has are:

Economic Strategy and Forecasting

• Reviewing and comparing the company’s past and present financial situation to improve financial strategy
• Generating forecasts for the company’s financial future
• Reporting on where the company is most financially efficient and where improvements can be made
• Predicting future scenarios and analyzing the best direction for the company’s success

Treasury Responsibilities

• Deciding the best ways for the company to invest money
• Overseeing the company’s capital structure
• Determining the best options regarding debt and equity
• Analyzing issues related to the company’s capital structure

Read More: What Should Small and Mid-size Businesses Expect From Their CFO?

Hierarchy: Director vs. Executive

The accounting department may be missing critical opportunities if there is no one in the role of controller. Not only that, but the CFO may be working overtime to get all the information they need to make accurate decisions. Likewise, without a CFO, the larger fiscal picture may be neglected, and the company may not have an accurate forecast of future finances.

The CFO is traditionally ranked just below the CEO in terms of hierarchy. The controller reports to the CFO, sometimes alongside the treasurer and tax manager. 

Below the controller can be roles such as the accounting manager, financial planning manager, accounts receivable manager, and accounts payable manager.

Read More: Signs Your Company Needs to Hire a CFO

Does Your Company Need a Controller or a CFO?

If you’re struggling to decide whether your company needs a controller, a CFO, or both, here are some things to consider:

Controller

You may consider hiring a controller if:

• Your business is expanding: If you are scaling your growing business and your company is becoming more complex as you add lines of businesses or open new locations, a controller can make recommendations to help you use your capital wisely and save money wherever possible. 
• You need to supplement your accountant: there is a significant difference between an accountant and a controller. A controller can supervise your accounting team and streamline your financial processes. 
• Your CFO is overwhelmed:  A controller can take a load off your CFO by focusing on the day-to-day supervision of the accounting team. They can provide the CFO with the necessary information to help them make accurate financial forecasts that support future strategic decisions for the business.

A controller can also help companies grow in several ways, including:

• Taking Accountability for Your Company Finances: Your controller will take full responsibility and accountability for your company’s financial systems and should have a thorough understanding of your business expenses from your financial statements.
• Finding areas where you could be saving on costs: Controllers find ways to improve profitability and budgeting, helping all departments align on ways to decrease expenses and improve product margins through cash flow management.
• Creating value as a business partner: A controller can manage vendor relationships to ensure the best terms and contracts. A good controller will push back on spending decisions and offer advice on ways to cut costs and use capital wisely, often opening up funds for more proactive initiatives for the business’ ultimate growth. 
• Managing your company data: Your controller will supervise the company’s accounting processes and make sure it’s carried out accurately, efficiently, and securely. Good controllers stay up to date on current accounting and finance technology and best practices to keep your business on the cutting edge. 

CFO

You may want to consider hiring a CFO if:

• You’re in a transition stage, such as going through a merger, acquisition, or relocation: It’s never easy going through a big change. A good CFO will keep your finances on track and provide high-level insight and executive leadership as your company transitions. 
• You need financial forecasts for your company: All the financial data you keep track of is being wasted if you can’t use it proactively. A CFO can turn your historical data into projections so you can make insightful data-driven business decisions for the future. 
• You’re overwhelmed: You have enough on your plate running the company every day, and the added burden of guiding your finance department can quickly take over all of your time if you don’t have the right support. A CFO will lighten your financial workload so you can focus on more important decisions. 

A CFO can help your business grow in several ways, including:

• Negotiate better deals: A CFO can help your company score better rates with vendors, secure credit lines and loans from banks, and negotiate with clients to give your business a financial advantage.
• Manage financial growth: A CFO will track all financial metrics across the board at your company and work hand in hand with each department to optimize financial growth. 
• Manage risk: You can only manage so much risk yourself. An experienced CFO will enforce the right financial controls and keep a vigilant eye on financial data to avoid any errors. 

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Outsourced vs In-House Controller: Which is Right for Your Business?

Outsourced controllers are likely less of a financial commitment than hiring in-house: In-house controller hires are longer processes with interviews, background checks, and likely recruiter fees involved as well as long contracts, benefits, and incentives. Both are experienced controllers that will report financial results for your accounting department. 

Outsourced controllers are already trained in processes that save time. Far less training time is needed when you use outsourced controller services. Additionally, the level of accounting expertise you have access to with outsourced teams of finance and accounting professionals is more sophisticated in their controller services than the expertise of one individual who gets hired in-house full-time. 

An outsourced controller will have experience in a wider range of industries providing innovative solutions to old problems. In-house controllers may not see the forest for the tree, missing opportunities to cut costs or amend business practices that may not be optimal. 

Vacations and time off will not leave your company high and dry when you rely on internal controls. With an outsourced financial controller on your team, you will have access to expertise in accounting and bookkeeping when you need it. The deeper bench that outsourcing offers is one of the major benefits of outsourcing finance and accounting functions. 

Contact Signature Analytics today to find out how we can help you optimize your company’s financial future.