CFOs and controllers are both senior positions in a company’s finance department that help ensure the business is financially stable and ready to grow. But how are these two jobs different, and which one does your business need first?
We’ll talk about what each person does, how they work together, and how to figure out what your business needs.
who is the CFO?
The chief financial officer (CFO) is the most senior person in a company’s finance department. They are in charge of everything that has to do with the company’s finances. Instead of doing things himself, the CFO will usually be in charge of the teams and people who are in charge of critical financial tasks like bookkeeping, taxes, and internal controls.
In addition to managing your financial organization, your CFO will offer strategic advice on your company’s financial goals, such as
- Performance:
Most of the time, it is the CFO’s job to set, track, and analyze your financial metrics and KPIs.
- Budgeting:
The CFO will often make the forecasts that are used to make your budget, and they will also help you make a budget that will help your business and help you reach your growth goals. The FP&A (Financial Planning and Analysis) team is in charge of budgeting at larger companies and reports to the CFO.
- Board decks:
Your CFO doesn’t just look at the numbers; they also look at what those numbers mean. Most CFOs have a significant role to play in putting together the slides for your board meetings.
- Recommendations for improvement:
As the head of the finance department, the CFO will probably look at significant business decisions that have a big effect on money (from pricing to real estate). They will also use best practices in finance and work to put the company on the best path for future growth.
- Fundraising:
Your CFO will help you evaluate possible investors and shape the story your company tells them about its finances.
It’s important to remember that you don’t have to hire a full-time CFO to handle these things. Companies that aren’t ready to hire a CFO can use outsourced CFO services to access senior financial expertise without the high cost of hiring a corporate officer.
what’s a controller?
A controller is also a senior member of the team that handles money. While the CFO is focused on strategy, the controller is usually more focused on directly managing your bookkeeping and reporting functions. Technical founders might think of them as the PM writing specs (“accounting policies”) for your accountants. In companies with a CFO and a controller, the controller usually oversees the accounting and financial operations teams and reports to the CFO.
Controllers are usually in charge of the following tasks, either directly or as team leaders:
- Policies for accounting:
Based on FASB rules, it is usually up to the controller to research and write accounting policies that are unique to your business.
- Accounting Statements:
How to close the books every month. Most of the time, the controller will be in charge of the bookkeeping team and ensure that the company’s books are done on time and according to the accounting policy.
- Financial operations:
The controller is usually in charge of processing accounts payable (paying your bills), accounts receivable (getting money from customers), payroll, and other similar operational tasks. These teams don’t work on the books but help the business run smoothly.
- Internal controls:
As a company grows and makes more money, it’s more important than ever to have controls and processes to ensure a paper trail and stop wasteful spending and internal fraud. Usually, the controller is in charge of these tasks (at large companies, however, there will usually be a separate internal audit function that reports directly to the board).
- Audit compliance: The controller is usually also responsible for ensuring the company passes any audits. This is on top of ensuring the company follows any financial rules that apply.
As with a chief financial officer, you don’t always have to hire someone in-house to do a controller’s job. There are a lot of companies that offer outsourced controller services, and Countick is one of them.
do you need a CFO or a controller?
Now that we’ve looked at what CFOs and controllers do, which suits your business?
Remember that the roles we’ve discussed so far aren’t mutually exclusive. If the two roles overlap a lot, that’s because they do. In smaller businesses, it’s typical for the CFO or controller to do things that the other position would generally do.
when a controller might be helpful:
- You don’t know if you’re handling things like COGS categorization or revenue recognition correctly. Usually, a bookkeeper isn’t qualified to write these accounting policies or fix these problems. Instead, they need the senior-level knowledge of a controller.
- Your money management isn’t excellent. A controller can help with everything from classifying expenses to setting up and keeping up internal controls.
- You are being audited or think you might be soon. A controller will help you through the audit process, including making any reports the auditors ask for and talking to them.
you might need a CFO if:
- You need a plan for how to grow your business. A CFO with a lot of experience will help you understand what’s going on in your business and advise you on how to reach your goals.
- You want to set and keep track of important business metrics like ARR, AOV, LTV, and CAC. A CFO will know how to help you determine which metrics are most important for your business and how to make sense of your numbers.
- You’re going to raise money. Spreadsheets are not the only thing that makes a round go well. A CFO will help you figure out the story behind your numbers and turn it into a pitch investors want to hear.
- You want to go public. Taking a company public is a big, complicated job, and after the IPO, you’ll have to follow many new rules about managing your finances. Companies that want to do this in the next one to two years should hire a CFO with experience in IPOs for startups.
A controller and a chief financial officer (CFO) can be expensive hires for a young company. Many controller salaries are in the high six figures, and the average CFO makes over $300,000 plus a lot of equity. If you need the help of a CFO or controller but don’t have the budget for a full-time employee, consider hiring a fractional CFO or an outsourced part-time controller. You’ll learn what you need to know to manage your money and keep your burn rate in check.
Countick not only gives young companies accurate books on time, but it also offers CFO and Controller services to help them grow.
