CFO vs. Controller: Who Should Run Your Finances? | Frank Mastronuzzi — Greenough Group

A Controller and a CFO are similar in many ways. They’re both finance professionals with an accounting background, typically with at least 10+ years of experience. They have similar skill sets, but they are differentiated by their focus and how involved they are with your financial strategy or day-to-day financial processes.

Many companies have both a Controller and CFO — but at this point, you may be wondering how you can afford to hire even one. Read on to learn more about the roles and responsibilities of both, the advantages they bring to your organization, and why many businesses are outsourcing their financial leadership.

What are the differences between Controller and CFO?

A Financial Controller is a high-level accounting manager that directly oversees all accounting-related activities and finance department activities in a company. A controller is responsible for the preparation of operating budgets, financial reporting, and payroll duties. A smaller company may choose only to have a controller who takes on some of the responsibilities traditionally held by a CFO.

A Chief Financial Officer (CFO) is a senior financial executive who is responsible for the economic direction of a company. They need to have a strategic outlook and an eye to market trends and competitor behavior and work closely with the CEO to inform business decisions. Duties include managing cash flow and financial planning, as well as financial projections and the ability to audit a company’s finances to identify and act on challenges and opportunities. Many, but not all, CFOs have a Certified Management Accountant (CMA) certification.

Financial Controller Duties

A controller directly manages the accounting team and oversees accounting operations, procedures, checks, and balances. In larger companies, they may be responsible for subsidiaries as well.

Transactional Oversight

• Monitoring accounts receivable and accounts payable
• Following up on late transactions
• Processing or overseeing payroll
• Supervising bank reconciliations
• Maintaining the balance sheet, ledgers, and sub-ledgers
• Overseeing the maintenance of accounting software and transaction capture

Implementation and Monitoring of Checks and Balances Financial Reporting

• Prepare weekly, monthly, and annual financial reports
• Preparing the annual budget and financial statements
• Report on financial operating metrics
• Monitor for budget fluctuations
• Generating analysis for the CFO or CEO

CFO Duties

The CFO of a company has less direct oversight of the day to day operations of the accounting team. Along with providing financial direction with short and long-term planning, they also build economic forecasts and develop strategic financial investment and partnership opportunities.

Financial Strategy and Forecasting

• Providing strategic recommendations to the CEO and executive management team
• Managing the processes for financial forecasting and budgets and overseeing the preparation of all financial reporting
• Advising on short-term and long term business objectives
• Reviewing the financial structures of all other departments
• Determining where a company’s finances are efficient and inefficient, and recommending changes
• Determining business risks and opportunities related to the current market and competition

Treasury Responsibilities

• Deciding how to invest company money best
• Overseeing the company’s capital structure
• Determining the best avenues related to both debt and equity

So does your company require a controller or a CFO?

The answer to this question ultimately depends on your current situation. If you’re currently looking for someone to implement or manage GAAP standard accounting processes with the development of regular reporting and cash flow management, a Controller can help.

If you’re going through a significant transition such as a merger or acquisition, require sophisticated financial forecasts and strategy, or need guidance on seeking and managing investment opportunities, a CFO is likely a better fit. In the competitive tech startup market, many VCs bring in CFOs early to help guide a startup’s rapid growth.

It’s possible that you need both roles in your organization, or a seasoned financial professional to take on a hybrid part. This is when it can be advantageous to look into a financial services firm such as Greenough Group, mainly if you are an SMB or startup still earning under $10m in revenue. A part-time controller or CFO provides you with the same tactical and strategic benefits either of those roles offer, with a cost that’s manageable.

An Entrepreneur article, When to Outsource , outlines the potential cost-savings in comparing a full-time CFO salary to hiring an outsourced CFO:

“A full-time CFO with a base salary of $175,000, plus an additional 25 percent for taxes and benefits, would cost $218,750 per year, or $18,229 per month. But most small companies might only need a CFO’s services for one day per week, at an estimated [monthly] cost of $6,400 — a 65 percent savings.”

Hiring a part-time executive allows you to save money while still benefiting from the same expertise you would gain from a full-time CFO or Controller. As they help your company grow, you can then scale up their involvement with your business as needed.

Our CFO and Controller leadership team has extensive knowledge of the financial considerations of several industries and has provided value to early-stage startups and Fortune 500 companies alike. Our consultants can implement all the systems and procedures you need for a stable financial future so you can concentrate on growing your business.

Contact us for a free consultation, and we’ll outline how our services can help your business reach the next plateau of success.

Originally published at https://www.greenoughgroup.com on September 1, 2020.