What is the difference between a controller and CFO? While there are functions of both a controller and CFO that support each other, both positions make distinctly different contributions to the organization.

The most basic difference between a controller and CFO is that a controller manages the measurement of historical results while a CFO predicts, strategizes, and facilitates numbers for the future. A controller’s main duties are to organize your existing books, keep them in order, and provide timely and accurate financial reports. A CFO, however, uses these reports to assess the current health of the organization and pinpoint strategic improvements. The CFO will also look at where the company is, where it wants to go, and detail in a long-term forecast exactly how the organization can meet or exceed those goals.

Functions of Controller

  • Accounting
  • Record-keeping
  • Managing information technologies
  • Financial & regulatory compliance
  • Payroll
  • Accounts
  • Cash balances
  • Financial report preparation

Functions of CFO

  • Analyzing numbers to improve future performance
  • Establishing efficient, scalable operations
  • Forecasting
  • Optimizing cash flow
  • Measuring and improving profitability
  • Debt & equity fundraising
  • Financial risk assessment
  • Establishing policies and procedures
  • Shareholder relationships

How do you know if your organization needs a full- or part-time controller?

There are several warning signs that indicate your organization is in need of a full- or part-time controller, and most revolve around past or present financial data.

1. You don’t have financial information/reports you need when you need them.

Controllers are responsible for providing timely financial information and reports so you can make intelligent, information-based business decisions. Since all major business decisions are contingent on numbers, it’s important to have someone around who can answer those questions quickly and provide you relevant financial reports and information when you need it.

 

2. Your financial reports are behind or inaccurate.

If you haven’t been operating your organization or making business decisions with up-to-date financial information, then you’re not running your organization as efficiently as you could be. A powerful change you can make in your organization is enlisting a full- or part-time controller who can provide accurate reports within 15 days of month-end. This helps you make more strategic and intelligent business decisions while keeping a steady pulse on the health of your organization.

3. Your finances seem a little out of control.

If you’re not confident that your team is on top of billing customers, collecting and applying client payments, paying invoices, or keeping records updated, then it’s time to add a full- or part-time controller to your organization. A controller will clean up your current financial records and make sure processes moving forward are streamlined according to your current needs.

If you have regular cash flow issues, however, you may want to consider a consulting CFO.

How do you know your organization needs a part-time CFO?

1. You’re raising capital

If your company is preparing to raise capital, it’s time to hire an outsourced CFO, at least for the fundraising process. Not only will a part-time CFO prepare your books for presentation and due diligence, your CFO will also provide a detailed long-term financial forecast. Most lenders or financiers won’t provide loans for or invest in your company unless they are confident in your potential for success—a long-term financial forecast shows them exactly where you are, where you’re going, and how you plan to get there.

Your part-time CFO will also help you prepare key financial metrics, negotiate term sheets, and answer any of the tough questions investors ask during fundraising. Having a CFO at the table also helps to validate your company and can often bring valuable relationships and contacts as most CFOs have raised capital for many organizations over several years.

2. Margins are tight or you have consistent cash flow problems

How efficiently is your company running right now? If your margins are tight, it could be a sign your company isn’t working at its peak performance. A part-time CFO will dig into your numbers and your existing systems and figure out where improvements can be made. Are there materials or services that could be purchased more inexpensively by renegotiating contracts or considering other vendor relationships? Are materials being wasted in any part of the organization? Are there inventory adjustments to be made? Departments that seem to be spending too much or too little? Systems that could be changed or optimized? Are your prices too high or too low?

A CFO brings with him or her years of experience in organizations just like your own, which means they’ve seen and solved challenges similar to those your organization faces. Having their experience and insight on your team can elevate your systems, processes, and strategy more than almost any other single hire has the power to do.

3. You need to improve your financial strategy

A full- or part-time CFO brings a level of strategy, insight, and execution for which small or inexperienced financial teams may not be qualified. CFOs have a wide range of industry, operations, and corporate finance experience. They focus on future cash flow more than historical data, and are experts in long-range operational planning and making sure every arm of the company is performing sustainably at peak performance.

One of a CFO’s most important tools is the long-term forecast. A financial forecast goes down to the detail to determine where money should be spent, where money should be coming from, and when. This forecast will guide budgeting, fundraising, sales, marketing, purchasing, and operations.

The Difference Between a CFO and a Controller – Final Thoughts

While a controller can be essential to keeping your current records organized and preparing timely and accurate reports, a CFO is your secret weapon for growth. With their tools, relationships, and expertise, your company gains insider knowledge from someone who has already helped dozens of companies just like your own succeed. They are the architect who takes your dreams and shows you exactly how to build them; they help you know who and what you need to get the job done in the most efficient ways possible, and help guide the implementation from start to finish.


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