Any business, no matter how big or small, needs someone to keep an eye on the finances.
For many small companies, a bookkeeper will do the job, but what if your company outgrows the scope of bookkeeping and needs a dedicated person to manage the finances? That’s where the roles of Chief Financial Officers (CFOs) or Finance Controllers come into play.
CFOs and financial controllers may have overlapping responsibilities within a company, but they each have specific roles that differ from one another. This can be confusing for business owners who are trying to figure out which position they need to fill to best manage their company’s finances.
What are the responsibilities of CFOs and financial controllers? How do these roles differ? What skills do they need to manage the role?
Lots of questions to go through so we better start right off.
What Is a CFO?
The CFO or Chief Financial Officer is the senior executive responsible for managing the financial affairs of a company.
The CFO’s primary responsibilities include developing and implementing financial strategies, overseeing financial planning and reporting, and managing the company’s investment activities. The CFO is also typically responsible for managing the company’s treasury function, overseeing tax compliance and risk management.
As a member of the senior management team, the CFO reports directly to the CEO.
CFO’s main responsibilities:
- Acting as the primary financial advisor for the company
- Advising the board of directors or CEO on financial matters
- Managing finance controllers and the finance department
- Developing financial strategies
- Developing a plan to increase revenue
- Managing debt, equity, and investments
- Supervising security, risk management, insurance, and various types of fraud mitigation
- Implementing technology solutions for accounting automation
Financial controller is a senior financial officer who supervises the financial department of a company and is responsible for its financial accuracy, performance, and compliance.
The financial controller position is typically found in larger organizations and reports directly to the CFO.
Financial controllers are responsible for the day-to-day management of the finance department and may also be involved in strategic planning, forecasting, and budgeting. They ensure that the organization’s financial statements are accurate and comply with applicable laws and regulations.
Financial controllers also develop and implement policies and procedures to safeguard the organization’s assets and minimize risk. They often work closely with auditors to ensure that the organization’s financial statements are free of material misstatements.
Main tasks of financial controllers
- Managing the accounting department
- Managing accounts payable and receivable
- Processing payrolls
- Ensuring that invoices are accurate and approved for payments
- Managing financial accounts
- Managing collections and debts
- Managing external audits
- External financial reporting (financial statements, tax statements, and tax filings)
- Conducting internal financial analyses and
- Preparing reports for CFO
10 Key Differences Between Financial Controller and CFO
- Education – While there is no set educational requirement for the CFO role, most candidates will have a bachelor’s degree in accounting or finance, with an MBA or other graduate degree. Financial controllers typically have a bachelor’s degree in accounting or finance and several years of working experience. Some companies prefer candidates who have a master’s degree in business administration (MBA) with a concentration in accounting or finance. Certified public accountants (CPAs) may also have an advantage when applying for a financial controller position.
- Responsibilities – The CFO is responsible for developing long-term financial plans and strategies for the company, and is involved in negotiating and overseeing major financial transactions, such as loans and investments. The financial controller is more involved in day-to-day bookkeeping and accounting tasks.
- Oversight – The financial controller oversees the day-to-day operations of the accounting department and focuses on short-term goals and tasks. The CFO manages long-term financial strategies and oversees both the day-to-day operations and strategic planning for the finance department.
- Reporting – The CFO is typically a member of the company’s executive team and reports directly to the Board of Directors or the CEO. The financial controller reports to the CFO.
- Focus – The financial controller focuses on historical data and compliance while the CFO focuses on both historical data and forecasting future trends.
- Skills – Financial controllers must have strong analytical and problem-solving skills and must be able to work effectively under pressure and deadlines. CFOs on top of that also need excellent communication and interpersonal skills.
- Experience – The CFO has a higher level of education and experience than the controller. Financial controllers typically have 5-10 years of experience in accounting. CFOs are more experienced, with 10-15 years of experience in finance management.
- Salary – Financial controllers typically earn less than CFOs.
- Job Outlook – The market demand for financial controllers is high, so people with appropriate backgrounds and education won’t have problems finding a job. The job outlook for CFOs is a bit more specific because companies usually choose their CFOs with greater care and caution.
- Career path – The usual career path for a financial controller is to become a CFO while the career path for a CFO is to become a CEO or to progress to a larger company.
CFO vs Controller FAQ
When to hire a CFO?
For small businesses, the question of when to hire a CFO can be a difficult one. A CFO can provide invaluable insights into financial planning and management, but also hiring a CFO can be a significant expense, and many small businesses lack the resources to support an additional senior executive.
Ultimately, the decision of when to hire a CFO depends on the specific needs of the business. If the business is experiencing rapid growth or working with complex financial products, then a CFO can be a valuable asset. But if the business is relatively small and simple, then it may be best to wait until the company is more established before hiring a full-time CFO. If you’re not sure whether your business is ready to take on a CFO, here are a few things to consider.
First, take a look at your revenue. If your business is still in the startup phase, it may not be generating enough income to justify the expense of hiring a CFO. However, if you’re seeing steady growth and your revenue is starting to plateau, bringing on a CFO can help you take things to the next level.
Another thing to consider is the complexity of your finances. If you have multiple income streams and are starting to see some serious cash flow, it’s time to start thinking about hiring a CFO. They can help you develop budgets and forecasting models, as well as manage investments and debt.
Finally, ask yourself whether you have the time to focus on strategic planning. A CFO can free up your time by handling all the financial details of running your business, so you can focus on growing the company.
When to hire a Financial Controller?
If you are thinking about hiring a financial controller, there are a few things to keep in mind.
First, consider the size of your organization and the complexity of your financial affairs. In general, larger organizations with more complex financial needs will benefit from having a dedicated financial controller on staff.
Additionally, it is important to consider the stage of development your company is in. If you are a startup or early-stage company, you may not need a full-time financial controller; however, as your business grows and becomes more complex, it may be time to consider hiring one.
Finally, be sure to verify that the candidate you are considering has the necessary skills and experience to effectively manage your finances.
With these factors in mind, you will be well on your way to finding the right financial controller for your organization.