Although the financial controller and CFO (Chief Financial Officer) share a lot in common regarding responsibilities, there are some critical differences between the two roles. Enterprises and midsized businesses often see the two working in tandem. Meanwhile, small companies typically have just one of the positions filled.
Here is a closer look at the duties of each and how they differ.
Who is a Financial Controller?
The financial controller is the person in an organization responsible for financial management and accounting. This includes preparing financial statements, managing cash flow, overseeing budgets, and collecting financial data.
The controller also works with external auditors to ensure that the company’s financial statements are accurate and comply with generally accepted accounting principles (GAAP) or International Financial Reporting Standards (IFRS) as required. They may also be responsible for filing annual reports with regulatory agencies such as the Securities and Exchange Commission (SEC).
A financial controller’s key responsibilities include:
- Maintaining financial accounting systems, recommending process improvements and internal controls.
- Overseeing the preparation of financial statements
- Coordinating and preparing annual audits
- Managing cash flow
- Supervising the finance staff and accounting operations
Who is a CFO?
The CFO is the head of the finance department. They are responsible for the company’s financial strategy and oversee all financial aspects, including accounting, budgeting, cash flow, and risk management. They work with other departments to ensure that the company meets its financial goals.
A CFO’s primary responsibilities include:
- Developing financial strategy
- Creating budgets
- Overseeing accounting policies, procedures and internal controls
- Monitoring financial performance
- Managing risk
- Negotiating contracts
- Working with investors and investment institutions
- Collaborating with chief information officers on technology decisions
- Identifying and managing business risks and insurance requirements
What are the Key Differences Between a financial controller and a CFO?
Now that the two roles are clearly defined, it’s easier to see how they differ. Here are the key differences:
Strategic Vs Operational
The CFO is more focused on the strategic financial planning of the company. This includes developing long-term goals and objectives and finding ways to achieve them. The controller, on the other hand, manages the day-to-day financial operations.
Internal Vs. External
The CFO works more with the internal stakeholders such as the Board of Directors, CEO, and other senior managers. They develop financial plans that support the company’s business goals.
While the controller works with internal parties, such as the accounting department, they also interface with external stakeholders, like creditors, suppliers, and tax authorities.
Big Picture Vs. Details
The CFO has a more holistic view of the company’s finances. They develop financial plans and make decisions that will impact the company long-term.
The controller is more focused on the details. They make sure that the day-to-day financial operations are running smoothly and efficiently.
Leadership Vs. Management
The CFO is a leader who provides direction to the finance department. They develop strategies and guide the team.
The controller is more of a manager who oversees financial operations. They make sure that the team is meeting deadlines and targets.
Policy Vs. Procedure
The CFO establishes policies and procedures for the finance department. They decide how the department will function and what processes will be followed.
The controller implements these policies and procedures.
Does Your Business Need Both?
The answer to this question depends on the size of your business. A small business would typically hire a financial controller first. As the business grows, it may eventually need a CFO too. However, this entirely depends on the specific needs of the company. Some would prioritize a CFO first before the controller.
Larger businesses usually have both positions filled. Having a CFO and financial controller in place ensures that all aspects of the company’s finances are managed effectively.
Filling Both Roles Through Outsourcing
Small businesses struggle with whether to hire an in-house CFO or financial controller. After all, both roles come with a significant price tag. Fortunately, there is an alternative available: fractional accounting services.
With fractional accounting services, businesses can outsource both roles to a team of experts. This is a more affordable solution that still provides all the benefits that come with having a CFO and controller on staff.
Accountero is here to help simplify complex accounting processes for business owners. We enable startup founders to get a bird’s eye view of their financial status by integrating all their financial data into our tech stack, which produces accurate and updated financial statements to help make more informed decisions.
Accountero’s fractional CFO services give you access to the most in-demand CFOs in the North American region to help you with financial modelling, forecasting, getting control, funding, and a better hold on your financial status.
The initial startup stage is the foundation-laying stage of every business, and every move needs to be guided. You can reach out to a financial expert with Accountero for the best guidance and assistance in your business’s financial matters.
About Accountero
Accountero is a “built for founders” financial hub for growth-focused startups. We simplify the accounting process for business owners. Get access to human-driven, tech-powered bookkeeping services, one-click access to advisors to help you save on taxes, and high-level reports to identify areas of growth potential. Talk to us today about your accounting needs.