Business Basics: The Difference Between Controllers and CFOs

In many small businesses, the financial team may be made up of one or two people. However, as your business grows, it’s important to ensure you’re utilizing the right people and skills for different financial functions.

Two roles that often overlap as businesses grow are the roles of controller and CFO. Here are the main differences between controllers and CFOs, and why your company should consider having both.

What Is a Controller?

The controller of the business is the head of the accounting department. At larger companies, the controller manages a team of accountants to ensure timely and accurate reporting, budgeting, tax compliance, payroll, and other accounting functions.

In smaller companies, the controller may be the only accountant, supported by other accounting clerks. The controller traditionally reports to the CFO, but in small companies, they may report directly to the CEO or President.

Controller Duties

Most controllers will complete any combination of the following duties to support the CFO and/or the financial goals of their company:

  • Monitor a company’s financial reports
  • Determine ways the company could reduce costs
  • Prepare and present business reports, financial forecasts, and bank statements to the leadership team
  • Supervise employees who aid in the completion of financial reports
  • Stay up to date with current trends in the financial market

If business were a game of football, the controller would be the scorekeeper. They are meant to be more retroactive, consisting mostly of record-keeping and financial reporting.

With these varying duties, controllers never find themselves doing the same tasks every day. They could spend one day sorting through mountains of data, and the next giving reports on the company’s financials.

What Is a CFO?

The CFO, as opposed to the controller, is more forward-looking. While the CFO really owns the entire finance function (again, the controller reports to the CFO if there is one), their main value is in forecasting and strategizing for the future. 

CFOs must be able to contribute value across many aspects of the business and financially strategize for each of them. They are also expected to use their financial understanding to know when and how to leverage different business elements to drive growth and revenue.

CFO Duties

Here are the duties a CFO will complete to help their business reach its financial goals:

  • Advise the CEO and other members of the leadership team of the financial implications behind business decisions
  • Help the organization make decisions with an ROI (return on investment) mindset
  • Run analyses of the company’s finances
  • Offer recommendations of the company’s financial opportunities
  • Oversee or execute updates to financial systems
  • Communicate with shareholders and other investors to better understand their expectations for the company
  • Manage the company’s financial teams, accountants, controllers, and tax professionals

Going back to the football analogy, if the CEO is the owner, then the CFO is like the coach — planning, reviewing film, and deciding what to do next. With just a bookkeeper or a controller, the business misses out on key opportunities for growth because of the lack of planning and strategy from the CFO

For the most part, CFOs will spend their days staying up to date on the progress of current financial objectives. Or, they could work all day on developing a new financial system. 

Since CFOs are in an executive position, an outsourced CFO can be just as effective as one that is based at your office building.

What Are the Main Differences Between a Controller and CFO?

Now that we are more familiar with the nuances of their roles, what is the real difference between a controller and a CFO? 

The main difference between these two jobs is the range of their focus—CFOs look at the big picture while controllers focus on the minute details of a company’s financial plans. 

Another difference between CFOs and controllers lies in who they manage. CFOs are in charge of every employee who works with the company’s finances. Controllers only deal with the teams that develop financial reports—they could either manage these teams or simply be a participant.

Additionally, while the controller is only expected to have a good understanding of the finances of the business, the CFO is expected to also have a good understanding of the business as a whole. 

How Do You Know If You Need a CFO or a Controller?

If your company wants to ensure its financial reports are accurate, offer more support to bookkeepers and accountants, and create error-free financial processes, you should hire a controller.

If your company wants to improve collaboration between its financial and executive teams and refine its overarching financial strategy, you should hire a CFO.

Which one should you choose? That entirely depends on the immediate needs of your company. But, if you’re like most companies, you probably have needs in both departments. Fortunately, CFOs and controllers work incredibly well together.

How CFOs and Controllers Can Work Together

While they are separate functions and each is necessary to run a successful business, the CFO and controller work together closely. Without a controller, the CFO may not have accurate financial data to make good decisions. Because their analysis and strategy rely on accurate financials, the CFO is also responsible for the performance of the controller.

While in separate roles, the CFO and controller work closely to realize the vision of the CEO and to drive the business forward. The controller needs to have a great understanding of accounting, GAAP, and best practices. The CFO needs to have a good understanding of the accounting function, as well as finance and business strategy. For this reason, having a good controller isn’t enough for most businesses. Without the experience and expertise a good CFO brings, companies miss out on the strategic and financial planning available.

Likewise, if you have a CFO who is more of a bean counter than a key advisor and strategist, you’re not fully leveraging the finance department of your business.

Get Your Financial Teams In Line

At Amplēo, we provide outsourced CFO services that fit your needs and help you avoid pitfalls, and take advantage of opportunities for growth. If you’re thinking it might be time to hire a CFO, contact us. We’ll help you find out how to improve your financial systems with a new CFO.

Categories: CFO Services, Controller