Understanding The Difference Between A CFO and A Controller
Though the CFO and the financial controller of a company work closely together, their duties are almost always vastly different. The most significant differences are best defined by breaking out the operations and duties that come with each job.
CFOs and controllers typically come from an accounting background and begin their careers as accountants. The accountant’s primary responsibilities include basic record keeping and financial reporting.
As an accountant, you may be given a controllership if you excel in accounting and financial reporting, as well as the capacity to handle many tasks and oversee others. A controller’s responsibilities and abilities extend beyond those of a bean counter. The controller job is a logical evolution from the accountant role; however, the CFO role is not always a natural progression from the controller.
Another critical component is the continuing interaction that exists between a controller and a CFO, which is what contributes to their success. This is why it’s crucial to understand the difference between the two. Keep reading this blog to find out more!
Who Is A CFO?
CFOs are often considered as the next CEOs, however, that’s far from the truth, and in fact, quite far from their job role as well. According to a survey of 675 Fortune 500 and S&P 500 businesses, just 6.9% of current CEOs were selected from the CFO ranks in 2018, a slight increase from 5.6% in 2012.
So, who exactly is a CFO?
A CFO’s skill set may be similar to that of a Controller, but a CFO must be involved with both the company and the statistics from the beginning. A CFO must also have a thorough grasp of the synchronization between numbers and company operations in order to keep a pulse on the working of all departments and keep the entire corporate structure well-oiled and running smoothly.
The CFO is responsible for reviewing historical financial reports and managing the business’s different risks while also expanding in a targeted manner in the future. Financial analysis, forecasting, completing funding, fund management, planning, implementing, strategizing, and mentoring the rest of the finance staff are some of the CFO’s day-to-day responsibilities.
A person who is qualified for the position of CFO must be an excellent financial strategist and a data-driven critical thinker.
Who Is A Controller?
As a controller functions more like the company’s Chief Accountant, he or she must have extensive professional expertise in accounting and financial reporting. They are also in charge of keeping the accounting books in order and continually assessing past performance in order to draw lessons that may be applied in the future.
The controller oversees the whole accounting department. They are in charge of allocating responsibilities to each department within accounting, as well as accounting, budgeting, compliance, reporting, assuring report accuracy, analyzing data, and providing these reports and models to the CFO for decision-making.
You don’t become a CFO just because you worked as a controller for a lot of years. As CFO, you must understand accounting and financial reporting; but, your skill set must broaden significantly as well.
The Difference Between A CFO & A Controller
The controller, who is more of a Chief Accountant, reports to the company’s CFO. The controller’s responsibilities include managing the company’s day-to-day finances and organizing income and spending. While some businesses mix or blend the two positions, a firm of scale and size need both roles to fulfill distinct purposes.
1. The Role of A CFO Vs A Controller: Strategy & Tactic
The CFO is responsible for planning for the company’s future, propelling it ahead, and advising stakeholders on critical business choices. The controller, on the other hand, is more likely to implement strategies that aid the accounting department’s day-to-day financial operations. These strategies allow the CFO to achieve the company’s strategic objectives.
A Chief Financial Officer’s strategic planning is frequently shown by their ability to recognize company hazards and make suitable actions to reduce those risks. Meanwhile, the controller puts their strategies into action in order to improve the company’s accounting systems.
The CFO’s strategic planning is important since it is their job to assist the CEO in persuading top management to adopt new ideas. Employees begin assessing achievements against the company’s goals after the new concepts have been conveyed to them. The CFO’s strategic leadership is responsible for steering the firm in the proper financial path while also increasing corporate accountability.
The controller, on the other hand, is largely responsible for reviewing the company’s costs and looking for methods to enhance the company’s profitability. A skilled financial controller will devise efficient and effective ways to boost profit margins, boost staff productivity, and discover cost-cutting opportunities.
2. Day-to-day Activities: Managing & Forecasting
The CFO and the financial controller have quite distinct day-to-day tasks, despite the fact that they both handle the company’s financial elements. The following is a comparison between the two:
A Controller’s Daily Activities
There are four levels of accountability for a financial controller, each with its own set of obligations. These are some of them:
Management
- Accounting procedures, methods, and rules are implemented and maintained.
- All accounting department functions are under their supervision.
- Monitoring accounting controls within subsidiary firms
Transactions
- Maintaining an up-to-date data storage system
- Maintaining a current data storage system
- Ensuring timely payment of accounts payable and receivables
- Ensuring timely payment of payroll
- Bank reconciliations are being supervised.
- Maintaining an up-to-date balance sheet
Reporting
- Creating timely and meaningful financial reporting
- Creating the yearly budget and report for the firm
- Suggestions for improving the company’s performance
- Financial operating metrics generation and reporting
- Budget deviations must be reported to management.
- Financial analysis for managerial decision-making
Compliance
- Debt management and compliance
- Providing external auditors with information
- Providing financial data for tax purposes
A CFO’s Daily Activities
In comparison to the controller, the CFO is less involved in the finance department’s day-to-day operations. A CFO’s accountability is divided into two levels:
Economic Strategy and Forecasting
- Examining and comparing the company’s financial position in the past and present
- Developing financial projections for the company
- Reporting on the company’s most profitable areas and areas where improvements can be made
- Speculating about future situations and determining the optimal course for the company’s success
Treasury Responsibilities
- Choosing the most effective strategies for the firm to invest its funds
- Managing the capital structure of the firm
- Choosing the best loan and equity alternatives
- Examining problems with the capital structure of the firm
3. Hierarchy: Director & Executive
If the controller position is unoccupied, the accounting department may be missing out on important chances. Not only that, but the CFO may be working extra to gather all of the data necessary to make informed judgments. Similarly, without a CFO, the company’s wider financial picture is jeopardized, and future financial forecasting may be inaccurate.
The CFO and financial controller’s combined efforts can assist the firm in realizing the CEO’s goals.
Determining If Your Company Needs A CFO Or A Controller
Here are some things to think about if you’re trying to figure out whether your firm needs a financial controller, a CFO, or both:
Hire A Controller If:
- Your business is quickly expanding, and you need financial records that follow Generally Accepted Accounting Principles (GAAP)
- Your accountant is unable to keep up with all of the financial information.
- You must create a budget as well as a cash flow projection.
- Financial management reporting is required.
Hire A CFO If:
- Accounting records isn’t the only thing you’ll need to grow.
- You’re going through a period of change, such as a merger, purchase, or relocation.
- Your business need financial predictions.
- You require assistance in making financial decisions.
Consider Outsourcing Your Accounting Activities
Outsourcing is the way to go for startup companies or businesses that are growing and need an extremely cost-effective as well as dedicated CFO services or dedicated Controller services. CharterCPA, for example, can connect you with top-tier financial specialists who can assist you in making the most of your company’s current and future finances. There are numerous benefits to outsourcing these functions:
- Without having to go through the entire advertising and hiring procedure, you receive high-quality specialists.
- You only pay for work that is done for your business.
- Salary, perks, bonuses, and increases are all reduced.
- You have complete control over how much you scale up or down based on your requirements.
Please contact our team of experts if you have a small or medium-sized firm and believe it might benefit from a CFO or controller. To learn more about how CharterCPA may help you improve your company’s financial future, contact us now.
Feel free to write to us with your questions at info@chartercpa.com or Schedule a call today.
Thanks & Regards,
Knowledge Base Team
CharterCPA Inc.
Your virtual accountant
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