Controller vs. CFO: Why Both Are Critical in Accounting

4 min read
12/20/22 9:00 AM

Choosing the right financial strategy is crucial for any growing business. But it's even more critical in a business offering professional services—planning ahead for expensive equipment, certified staff, and reliable coverage all come at a high price, and you need to know your business can support any growth moves you make. But planning out your own strategy can take a lot of time away from your core responsibilities, and it may even fall outside of your expertise. A financial expert on your team, such as a controller or a CFO, can shoulder some of that responsibility and give you the insights, expertise, and experience-based knowledge you need to strengthen and grow your business.

You may be familiar with CFOs, while controllers may be a little less well-known. However, both roles matter; in fact, controllers' responsibilities are continually shifting to include IT-related and strategic objectives. This shift is crucial for small businesses that need to protect client information, internal financial data, and more without conventional enterprise-level resources. Learn more about the critical role each one can play in your business, why you need both, and how you can fit both roles into your budget without making sacrifices.

Controller vs. CFO: A Look Into Financial Strategy vs. Tactics

Strong financial teams are made up of multiple different roles. The two key roles for monitoring, planning, and financial growth strategies are controllers and CFOs. They're not interchangeable, so let's take a quick look at the differences between the two.

What Is a CFO?

A Chief Financial Officer is the C-suite-level executive responsible for financial strategy, monitoring, and compliance. They take the lead in a business's comprehensive financial strategy to ensure the business has a strong foundation for cash flow and future growth. 

A CFO's key responsibilities include the following:

  • Preparing financial reports
  • Forecasting future growths
  • Directing financial activities
  • Tracking cash flow
  • Determining financial strengths and weaknesses

What Is a Financial Controller?

Financial controllers focus more on compliance and monitoring than strategic growth. Also called comptrollers, controllers operate as the lead accountant for a business. They ensure the records are accurate, manage compliance and tax obligations, and ensure the day-to-day operations of the finance department are organized.

Think of a controller as the one ensuring your financial processes are running smoothly and giving your CFO the right financial data so your company can strategically grow.

Why Both Roles Are Critical in Your Small Business's Financial Success

With the CFO as the forward-thinking strategist and the controller as the one keeping your financial operations running smoothly, it's clear that both roles are essential for your business. However, many small businesses simply don't have the funds or capacity to hire two full-time, salaried financial experts at the same time, especially while managing staff, equipment, and overhead. As a result, some businesses try to prioritize just one of the two roles, which can lead to a lot of financial risks. Here's why it's important to have both in a professional services company:

1. Make confident business decisions based on current financial data.

Controllers keep financial books up to date, ensuring historical data and data up to the minute are as accurate as possible. This, in turn, facilitates more strategic decision-making from your CFO, who relies on accurate data to forecast revenue and plan financial moves. The better the data, the more the CFO can drill down into potential inefficiencies and create stronger growth policies.

2. Eliminate penalties and non-compliance fees.

Organizations must stay GAAP-compliant, manage their tax obligations, and prevent any errors or potential security breaches. A precise, reliable controller ensures all of these responsibilities are handled through strong processes. By taking this off a CFO's shoulders, the controller ensures that CFOs can spend more time on partnerships and investment initiatives outside internal operations. When a CFO and controller work together and trust each other, both can ensure the company has the strongest foundation for long-term growth.

3. Take advantage of tax-saving opportunities.

Controllers focus on the day-to-day. As a result, they can uncover granular cost-saving opportunities by reducing expenses and eliminating potential fines or penalties. At the same time, a CFO focuses on the long-term picture of driving the company in certain directions to reduce expenses and increase profitability. They work hand-in-hand by focusing on different savings avenues.

When You Might Need a CFO or Controller

Now that it's clear what these two different roles manage and why it's important to have both, you can more closely examine your business's needs, so you know when one brings the most possible advantage.

You Need a CFO If:

CFO-level services should be your priority if your business needs very sophisticated reporting, either because you have a complex financial landscape or because your company is making millions of dollars in revenue each year. CFOs are also vital if your business is entering a growth phase when you need specific guidance. The right financial expert can help you determine long-term objectives for your business and the strongest approaches for realizing those goals.

A third—and often overlooked—benefit a CFO brings to the table is succession planning. Your business can continue to grow more smoothly if you have a plan for retiring executives, turnover in key leadership positions, and other areas of potential turbulence.

You Need a Controller If:

When you need a better handle on your day-to-day finances, look for a controller or comptroller you can trust. If better bookkeeping and more financial accuracy are a priority, the controller can assess your current processes, implement better procedures and controls, and clarify your expenses, compliance obligations, and cash flow. Ultimately, the controller will own the entire accounting process.

Your needs will also vary based on the financial maturity of your business. If your organization is more complex, whether at the emerging stages or at a new stage of growth, having both roles filled is vital. Hiring a fractional CFO and controller, as opposed to full-time employees, can enable your business to hire both on a contractual basis so you get the benefits of both without the expenses of two large salaries and benefits packages. That's where the financial experts from Dillon Business Advisors come in: you can hire fractional CFOs and controllers at a fraction of the cost without sacrificing either day-to-day control or long-term strategy.

Find the Financial Support You Need With Dillon Business Advisors

At Dillon Business Advisors, we match businesses with a team of financial advisors who take on the roles of CFO, controller, and client service manager on a part-time basis that fits your business's needs, budget, and goals. You can focus on your business's operations and gain trusted financial partners. Contact us today to start a business analysis.

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