Business Basics: The Difference Between CFO and Controller

December 05, 2018 By Alysha Willden

In many small businesses, the financial team may be made up of one or two people. However, as the function grows, it’s important to ensure that you’re utilizing the right people and skills for different financial functions. Two roles that often have a lot of overlap as businesses grow are the roles of Controller and CFO. Here’s why your business needs both.

Controller

The controller of the business is essentially the head of the accounting department. At larger companies, the controller usually 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, however, in small companies they may report directly to the CEO or President.

If business were a game of football, the controller would be the scorekeeper. Their function usually is more retroactive, consisting mostly of record keeping and financial reporting, as opposed to working to alter the financials of the future.

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 of the company when there is one), their main value add is in forecasting and strategizing for the future. While the Controller is only expected to have a good understanding of the finances of the business, the CFO is also expected to have a good understanding of the business as a whole, being able to contribute value across many aspects of the business and assist with strategizing for each of them. They are also expected to use this understanding to know when and how to leverage different business elements to drive growth and revenue.

Going back to the football analogy, the CFO is like the coach — planning, reviewing film, and deciding what do to 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.

How They 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 relies on accurate financials, the CFO is also, in part, responsible for the performance of the Controller.

While 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, but they’re more of a bean counter than a key advisor and strategist, you’re not fully leveraging the finance department of your business.


If you’re thinking it might be time to hire a CFO, check out this article, or contact us. At Advanced CFO, we provide outsourced CFO services that fit your needs and help you take advantage of opportunities for growth and avoid pitfalls.

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