CFO vs. Controller: What’s the Difference?

The controller versus CFO debate is a relatively new yet puzzling one. Some companies choose to have both a CFO and a controller in their workplace, while some prefer only having one. Although both roles are responsible for overseeing a company’s financial aspects, the difference in their day-to-day obligations isn’t very clear.

If you are a business owner and have been pondering over this question of CFO vs controller for quite some time, it either means that your venture has become relatively established or you’re in a crunch and need to know a more convenient option to get proper financial management done for your business. So, let’s dissect both the roles in detail and see what characteristics set them apart.

A CFO, or a Chief Financial Officer, is a senior executive who is responsible for the management of the accounting and financial operations in a company. They review all the work done by the finance and accounts departments and prepare projections to plan strategically for the company’s future.

Being part of the executive management team, the CFO must constantly keep in touch with numerous different company members, both at higher and lower levels. Usually, a CFO’s position is the third highest in an organization; therefore, they play an essential role in the strategic endeavors that dictate the growth and development of a company.

See: What Benefits Do You Get From Outsourced CFO Services?

To dive deeper into the debate of CFO vs controller, let’s have a look at the responsibilities of a CFO:

• Monitors the financial performance of the company based on reports given by the controller.

• Prepares the budget for the company or reviews the budget prepared by the controller.

• Makes strategic future plans by generating projections.

• Presents financial-related information and analyses to the top management of the company and to the board.

• Makes decisions that will lead to improvement in the management of finances.

• Identifies problem areas related to financial operations and suggests solutions / takes responsibility for reviewing the implementation of the solutions.

• Helps in the process of raising funds by interacting with investors and lenders.

• Manages the entire finance and accounts team and ensure that the work is being done effectively.

• Helps the CEO with preparing strategies related to finances.

A Controller, on the other hand, is a key member of the finance department who reports to the CFO. Also referred to as the financial controller, they are responsible for managing the accounting and finance processes, ensuring it is done as per norms.

The controller is usually the primary person responsible for preparing the budget for the company, and they also prepare reports that inform important financial decisions. In many organizations, controllers are given a seat at the directorial table for deciding on which technologies and practices the company should introduce within the finance department.

Let’s have a look at the responsibilities of a Controller to further study the difference between a controller and a CFO:

• Works as a subordinate to the CFO and provides reports necessary to make decisions.

• Assists in preparing the budget.

• Ensures day-to-day accounting work is being carried out correctly.

• Ensures all the financial statements are prepared on time.

• Reviews the collective work of accounts and finance teams.

• Ensures that tax filing is done as per schedule.

• Ensures internal controls are in place.

• Approves all day-to-day transactions related to accounts and finances.

• Coordinates with external auditors and ensures internal audit is being conducted by the audit function.

• Ensures that your ledgers are accurately reflecting the money moving in and out of your business.

These differences between a controller and a CFO might seem like an overlap between the responsibilities of these two positions. That is primarily the reason why many small businesses are unable to distinguish between the two and choose to employ either a CFO or a controller, not both. Let’s take a deeper dive and understand the differences between these two authorities:

• The CFO reports directly to the CEO or the MD of the company, while the controller reports to the CFO.

• The CFO is responsible for overall planning and strategy, while the controller handles day-to-day operations.

• The CFO makes decisions related to strategies. Based on these strategies, the controller devises tactics and ensures they are implemented at operational level.

• The CFO carries out analyses of finances while the controller provides reports and information needed for the said analyses.

You will need a CFO as opposed to a controller for your company under the following circumstances:

• If your company needs guidance to frame strategies for financial success.

• If you want to establish key metrics to keep track of your finances.

• In case you need to raise funds for your venture. If this is the case, then the CFO can help you create a pitch to convince your investors regarding your financial plans.

• When you are planning an IPO, you will need the CFO’s help to ensure you are ready to go ahead and be listed in the financial market.

• If you want forecasts and projections for the future, a CFO can do it the most effectively.

• In case your business is going through a major transition like a merger, acquisition, or takeover, you will need the expert guidance of a CFO.

On the other hand, you will need a controller as opposed to a CFO for your company under these circumstances:

• When your financial operations are not properly developed, and you need internal controls in place. This is when you need the help of a controller the most.

• If you are not confident that areas like revenue recognition or COGS categorization are appropriately managed, a controller’s expertise can add value to it.

• If you need to maintain records as per GAAP or need audit assistance, you will need a controller.

• If you are worried about fraud or the accuracy of your records, then you may need a controller to put things in place.

While knowing the differences between a controller a CFO is helpful, it’s also necessary to know whether your business is in a position to afford one. In case you have a small business, hiring a CFO or an in-house controller can be a very tricky gamble, as the salaries of these employees go up to six figures and even higher.

See: Monily’s Controller Services For Informed Decision-Making

If you are not able to afford them as full-time employees, then going to the route of outsourcing to a fractional service such as Monily is a much better method of getting both the work of a CFO and controller done efficiently. Through this option, you will benefit from the expertise as of a full-time hire but you will only be paying for the services that your business needs instead of signing up for the whole package. This allows you to indirectly keep your budget under control.

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