Choosing between a controller and a CFO is crucial for any business, especially as it grows and its financial needs become more complex. The main difference between a controller and a chief financial officer (CFO) is that controllers focus on detailed financial reporting and compliance, while CFOs are strategic leaders guiding the overall financial direction of the company.
Both of these finance professionals are vital for maintaining the financial health of an organization. However, they have different responsibilities and areas of expertise that are essential to understand before making a decision.
The Roles of a Controller vs CFO
Understanding the respective roles of controllers and CFOs can help you determine the right fit for your business needs.
What Is a Controller?
A financial controller, also known as a comptroller in nonprofit businesses and governmental entities, is the company’s lead accountant overseeing the accounting department. They focus on historical financial data and day-to-day management of the accounting team, reporting to the company’s CFO and executing their strategy and vision.
Key responsibilities of a controller include:
- Managing the Accounting Department: Controllers supervise the accounting team, ensuring accurate and timely financial reporting.
- Day-to-Day Accounting: They oversee accounts payable, accounts receivable, payroll, and bank reconciliations.
- Ensuring Compliance: Controllers ensure adherence to relevant accounting standards and regulations, such as Generally Accepted Accounting Principles (GAAP).
- Producing Financial Statements: Controllers generate essential financial documents, including balance sheets, income statements, and cash flow statements. They also manage external reporting including tax and GAAP financial statements.
- Overseeing Internal Controls: They implement and maintain controls to safeguard the company’s assets and ensure financial accuracy.
- Budgeting and Forecasting: Controllers create budgets and financial forecasts to guide financial planning.
- Handling Audits: They liaise with auditors during financial audits.
- Technological Integration: Controllers implement advanced accounting software and automation tools to streamline financial processes and ensure real-time financial reporting.
- Corporate Social Responsibility (CSR) and Sustainability: Controllers are increasingly tasked with ensuring that financial statements reflect CSR initiatives, such as environmental impact, social governance, and sustainability metrics. They need to track and report on these metrics accurately to meet regulatory requirements and stakeholder expectations.
What Is a CFO?
A chief financial officer (CFO) holds a strategic and expansive role, focusing on forward-looking financial planning and decision-making to guide the company’s future. They oversee the entire finance department and work directly with the CEO.
Key responsibilities of a CFO include:
- Developing Financial Strategies: CFOs create long-term financial plans and strategies to ensure the company’s growth and sustainability.
- Managing Investor Relations: They communicate with investors, board members, analysts, and stakeholders about the company’s financial performance, strategy, and future prospects.
- Overseeing Financial Planning and Analysis: CFOs analyze financial data to inform strategic decisions and identify growth opportunities.
- Handling Risk Management: They assess financial risks and develop strategies to mitigate them.
- Managing Capital Structure: Chief financial officers decide on the best mix of debt, equity, and internal financing to fund the company’s operations and growth.
- Guiding Mergers and Acquisitions: They evaluate potential mergers, acquisitions, and other strategic investments.
- Technological Innovation: CFOs lead strategic technological initiatives, such as utilizing big data analytics to drive financial forecasting, risk management, and strategic planning.
- Corporate Social Responsibility (CSR) and Sustainability: CFOs integrate CSR and sustainability into the company’s overall financial strategy, assessing the financial implications of sustainability initiatives and communicating their value to investors and stakeholders.
Key Differences Between a Controller and a CFO
These are some of the key differences between controllers and CFOs:
Scope of Responsibilities
A controller primarily focuses on accounting, compliance, and detailed financial reporting. A CFO engages in high-level financial strategy, planning, and risk management.
Qualifications
Controllers usually have a CPA (Certified Public Accountant) license or a CMA (Certified Management Accountant) certification with experience in large CPA firms or industry-specific roles.
CFOs often hold an MBA and may also have a CPA license or CMA certification, with backgrounds ranging from controller roles to positions in CPA firms or Wall Street finance.
Skill Sets
A controller has expertise in accounting principles, financial reporting, compliance, and internal controls. A CFO offers strong skills in strategic financial planning, risk management, capital structure, and investor relations.
Interaction With Other Departments
Controllers work closely with the accounting team and external auditors to ensure accurate financial reporting.
CFOs collaborate with various departments, including operations, sales, and marketing, to align financial strategies with business objectives.
Controller vs CFO Salary
One significant consideration when deciding between a controller and a CFO is the salary. Salaries for controllers and CFOs can vary significantly depending on the size and location of the company, as well as the industry. Factors like education, certifications, additional skills, and years of experience also influence salary levels.
Generally, CFOs command higher salaries due to their broader strategic responsibilities.
Controller Salary
According to recent 2024 data, the average salary for a US-based financial controller ranges between $217,403 and $299,581 annually.
CFO Salary
The salary for a US-based CFO is significantly higher, typically ranging from $334,300 to $572,100 per year.
Cost Benefits of Outsourced CFO Services
For smaller companies that may not need a full-time CFO, outsourced (fractional) CFO services provide a cost-effective solution. These services offer the expertise of a CFO at a fraction of the cost, allowing companies to access high-level financial guidance without the financial commitment of a full-time executive.
Some of the benefits of an outsourced CFO include:
- Cost Effective: Engaging a CFO on a part-time basis will reduce costs while gaining access to high-level financial expertise.
- Flexibility in Financial Leadership: Outsourcing CFO services allows for flexible engagement based on the company’s needs, whether for short-term projects or ongoing strategic guidance.
- Scalability: As your business grows, outsourced CFO services can scale with you, providing tailored financial expertise without the overhead of a full-time executive.
- Access to a Broad Skill Set: Outsourced CFOs often bring diverse industry experience and a wide range of financial skills that can benefit companies looking for comprehensive financial oversight.
- Mentor Capabilities: Fractional CFOs can also provide mentorship to your controller and finance team, fostering their development and enhancing their skills.
For a more detailed look at fractional CFOs, review our guides What Is a Fractional CFO and the 12 Benefits of Having a Fractional CFO.
When to Hire a Controller
These are two examples of when to hire a controller:
Small to Medium-Sized Businesses
Small to medium-sized companies with straightforward financial operations benefit from a controller’s expertise in managing day-to-day accounting functions. Controllers ensure financial accuracy, compliance, and timely reporting, which are crucial for operational stability.
Early-Stage Startups
Startups in their early stages need to establish robust financial reporting and compliance mechanisms. A controller can help set up these systems, ensuring that financial data is accurate and that the company complies with relevant regulations from the outset.
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When to Hire a CFO
Here are two examples of when to hire a CFO:
Growing Companies
Companies experiencing growth, raising capital, or entering new markets need a CFO’s strategic financial leadership. CFOs guide financial planning, manage investor relations, and develop strategies that align with the company’s long-term goals. They will manage risk by implementing robust financial controls and maintaining vigilant oversight of financial data to prevent errors.
Complex Financial Structures
Businesses with multiple revenue streams, international operations, or complex financial structures require a CFO to manage the intricate financial landscape. CFOs oversee capital management, financial risk, and strategic investments, ensuring the company’s financial health.
Controller vs CFO: Which Is Right for Your Business?
Choosing between a controller and a CFO depends on your company’s current needs and future goals. If your primary need is accurate financial reporting and internal controls, a controller is likely the right choice. However, if you need strategic financial planning and leadership, investing in a CFO or outsourced CFO services will provide the expertise required to drive your business forward.
Assess Your Business Needs
Start by assessing your business’s financial complexity, growth stage, and budget to make an informed decision.
- Financial Complexity: Evaluate the complexity of your financial operations. Simple operations may require a controller, while complex financial landscapes benefit from a CFO.
- Growth Stage: Consider your company’s growth stage and future plans. Growing companies and those looking to expand should consider hiring a CFO.
- Budget: Assess your budget for hiring full-time positions versus fractional or outsourced services. Remember, outsourced CFO services can provide strategic oversight without the full-time salary burden.
Combining Both Roles
In some cases, having both a controller and a CFO can provide comprehensive financial management, balancing detailed accuracy with strategic oversight.
- Enhanced Financial Control: The controller ensures meticulous financial reporting, while the CFO focuses on long-term strategy.
- Balanced Workload: Dividing responsibilities prevents burnout and ensures both operational and strategic goals are met.
- Improved Decision-Making: Combining detailed financial data from the controller with strategic insights from the CFO leads to more informed decisions.
Making the Right Choice for Your Business
Choosing between a controller and a CFO depends on your company’s size, financial complexity, and strategic goals. While controllers focus on financial accuracy and compliance, CFOs provide strategic leadership and financial planning. For many businesses, especially those in growth phases, both roles are essential.
Outsourced CFO services offer a flexible and cost-effective alternative for companies needing strategic financial guidance without the full-time salary. By understanding the distinct roles and benefits of controllers and CFOs, you can make an informed decision that best supports your company’s financial health and growth objectives.