How to Know If You Need a Controller vs. CFO (or Both)
In a growing business, there comes a time when the owner needs help with the financial side of running the business: accounting, budgeting, forecasting, tax planning and cash management—just to name a few.
The question is, should you hire a Controller, a CFO or both?
Chief financial officers and Controllers have a lot in common, but their roles are different. In this article, we’ll explain the difference between Controller vs. CFO duties and how their skill sets complement each other within an organization.
The Role of a CFO
A Chief Financial Officer (CFO) is a strategic partner to the CEO, providing high-level, forward-looking financial guidance.
Typically, the CFO isn’t involved in the day-to-day management of the company’s financial accounts. Instead, CFO duties revolve around strategy, forecasting, growth plans, risk management, regulatory compliance and overall company performance.
If the organization has a financial Controller, the Controller reports to the CFO. The CFO, on the other hand, reports to investors and other members of the executive team, such as the business owner, CEO or Executive Director (in the case of a not-for-profit organization).
The Role of a Controller
A Controller is the head of the accounting department, focusing on the day-to-day financial operations of the organization.
Depending on the company’s size, the Controller may have several staff accountants working for them to handle recording financial transactions, cash balances, accounts payable and receivables, etc. The Controller also oversees the work of their staff to ensure accurate financial reporting.
One of the primary responsibilities of the Controller is managing cash flow. This is a pivotal responsibility because cash flow is the lifeblood that keeps the business operations running smoothly. Ensuring a business can meet its financial obligations, such as paying staff salaries, suppliers and creditors on time, is critical for having profitable operations
The Controller also provides relevant data to support high-level decisions, helping the CFO determine why the company misses a goal or doesn’t perform as expected and seeks solutions to accounting and financial reporting problems.
How the CFO and Controller Work Together
Ideally, the relationship between the CFO and the Controller is based on trust and collaboration. Each plays a pivotal role in ensuring the company’s financial health and stability.
The Controller, with their operational focus, provides the CFO with accurate, up-to-date financial data. This data forms a vital foundation for the strategic decision-making of the CFO. The CFO, in turn, utilizes this data to guide the company’s financial strategy, often relying on the Controller’s expertise to understand the finer details. They communicate regularly, creating a dynamic feedback loop that allows the company to respond quickly to financial challenges and opportunities.
In essence, the Controller is the CFO’s right hand, providing the granular detail that the CFO needs to shape the broader financial strategy. Together, they form an invaluable partnership that drives the organization’s financial success.
CFO vs. Controller: Which One Do You Need?
If this is your first significant accounting and finance team hire, which role should you focus on filling first: Controller vs. CFO?
It really depends on your needs.
When You Need a Controller
A Controller is critical when your business is developing its financial footing, particularly when it grows beyond basic accounting needs.
If you find yourself caught up in bookkeeping, implementing internal controls, complying with tax filing obligations and regulatory compliance, or simply needing better support for your overall accounting, it’s time to consider hiring a Controller. They can handle these intricate financial tasks and offer accurate insights into your business’s financial health, giving you more time to focus on your business’s growth and development.
According to Oracle NetSuite, companies generally hire financial Controllers when annual revenue exceeds $5 million.
When You Need a CFO
On the other hand, you might need a CFO when your company starts dealing with more complex financial matters like strategic planning, capital structure decision-making and investment opportunities. If your business is at a stage where financial decisions have far-reaching consequences on its future, bringing in a CFO becomes essential. They can analyze complex financial data, identify trends and provide strategic financial direction that aligns with your business’s long-term goals. The CFO also plays a crucial role in managing relationships with investors and other stakeholders, which becomes increasingly important as a company grows and seeks additional funding.
Oracle NetSuite reports that companies typically have revenues of at least $25 million before hiring a CFO. However, that threshold might be lower in some startups and smaller companies with aggressive revenue growth goals and plans to go public in the near future.
When You Need Both a CFO and a Controller
In some cases, you might need both positions. The need for a Controller and CFO becomes crucial as your organization expands and financial roles become increasingly specialized. While a Controller ensures that the financial records are accurate and maintains regulatory compliance, a CFO’s strategic financial oversight guides long-term financial planning and decision-making.
Together, they enable an organization to operate efficiently while planning for future growth and managing risks. If your business is at a stage where it needs to balance operational efficiency with strategic growth, hiring both a CFO and a Controller can be the key to achieving financial success.
Windham Brannon Can Help
CFOs and financial Controllers each possess their own distinct set of skills that are essential components of an organization’s success.
If you need this level of expertise in your accounting department but don’t have the need (or budget) to staff full-time experts in these positions, hiring a fractional Controller or CFO may be the right business decision. Taking advantage of fractional talent provides you with the same level of expertise but with cost savings compared to offering full-time salaries and benefits.
If you need help deciding between a Controller vs. CFO (or both) or want more information about our outsourced accounting services, please reach out to a Windham Brannon advisor today, or contact Rebecca Smith and Jodie Bartock. We are happy to help you identify the resources you need to optimize your company’s financial future.
