Controller vs CFO: The Best Choice for Your Business

Blog post banner: CFO vs controller: which is the best choice for your business? by Tax Hack Accounting

The Controller and Chief Financial Officer (CFO) are two important positions in managing a business’s financial affairs. Although both positions contribute significantly to a company’s financial success, their responsibilities and decision-making responsibilities vary.

The Controller’s primary responsibility is to oversee the daily financial operations of the company, ensuring accurate financial record-keeping and reporting. The Controller also manages the accounting team and is responsible for maintaining compliance with financial regulations and standards.

In contrast, the CFO is responsible for overseeing the financial strategy of the company. The CFO works closely with the executive team to make strategic financial decisions that align with the company’s goals and objectives. Additionally, the CFO is responsible for managing the company’s financial risks and ensuring the company’s long-term financial stability.

Understanding the differences between these two roles is crucial for business owners to make informed decisions about which position is best suited to their company’s needs. Depending on the size and complexity of the business, a company may require both a Controller and a CFO, or one person may be able to fulfill both roles. Ultimately, the right choice will depend on the specific financial needs and goals of the company.

What’s the Difference Between a Controller and a CFO?

Although these roles are similar, there are some notable differences including responsibility, compensation, and daily tasks.

What is a CFO?

The Chief Financial Officer, commonly referred to as the CFO, is a key executive position within a company. As the title suggests, the CFO is primarily responsible for overseeing the financial operations of the business. This includes managing the budget, financial planning, and analysis, as well as financial reporting.

The CFO is typically a high-ranking member of the executive team and reports directly to the Chief Executive Officer (CEO). As the lead financial strategist at the company, the CFO plays a critical role in developing and executing the company’s overall financial strategy and long-term plans. The CFO takes a more big-picture view and helps shape the direction of the company’s financial future.

What is a Controller?

In a typical corporate structure, the position that reports directly to the CFO is the Controller. This role is responsible for overseeing the day-to-day management of the accounting department, including ensuring accurate financial reporting, managing the general ledger, and overseeing accounts payable and receivable.

The Controller also plays a key role in implementing the company’s financial strategy and works closely with the CFO to ensure that financial goals are met. Often referred to as the CFO’s top lieutenant, the Controller serves as a bridge between the accounting staff and the CFO, communicating financial information and updates to both parties.

The Controller is often the boots-on-the-ground point of contact for other executives within the company, providing financial analysis and insight as needed to inform decision-making.

Smaller organizations that don’t need both a CFO and a Controller may just have a Controller. For very small businesses, most of the strategies will be devised by the owner, and the Controller will ensure that the company’s books are up-to-date and bills are paid in a timely manner. In this case, the Controller will function with more autonomy than a bookkeeper, but will still only have a passing influence on the company’s strategic decisions.

Chart comparing the duties of a CFO and a controller.

What Does a CFO Do?

The role of a Chief Financial Officer (CFO) is an executive position that carries a significant amount of responsibility within a company. One of the primary responsibilities of the CFO is to develop and implement the company’s financial strategy. This includes analyzing market trends, identifying opportunities for growth, and managing financial risk.

In addition, the CFO serves as a key advisor to the CEO and Board of Directors, providing insight into financial performance and advising on strategic decisions. CFOs act as financial liaison for investors.

The CFO is also responsible for overseeing financial reporting and compliance, ensuring that the company is in compliance with all relevant regulations and reporting requirements. The CFO is a critical member of the executive team, responsible for ensuring the long-term financial health and success of the company.

What Does a Controller Do?

A Controller, also known as a Financial Controller, plays a crucial role in managing the financial affairs of a company. They typically report to the CFO or other key executives and serve in a more managerial role, overseeing the day-to-day operations of the accounting department. One of the key responsibilities of the Controller is to develop and implement internal policies and procedures to protect company assets, such as cash and inventory.

They are responsible for ensuring accurate financial reporting and compliance with relevant regulations. Additionally, the Controller is often the face of the accounting department, interacting with other departments and providing financial information and analysis to executives and stakeholders. The Controller is a vital member of the finance team, responsible for managing the company’s financial operations and ensuring the accuracy and integrity of financial reporting.

What Are Typical Salaries for CFOs and Controllers?

The salaries for CFOs and Controllers can vary based on several factors, such as industry, company size, and location. However, typically, CFOs earn a higher salary than Controllers. This is because CFOs are responsible for more high-level decision-making and oversee more strategic aspects of the company.

According to Indeed, over the past three years, the average base salary for a CFO is $148,750 per year. However, it’s important to note that this is only an average, and some CFOs may earn much higher salaries, depending on the company’s size and industry. Being on the executive team, CFOs are usually eligible for higher bonuses than Controllers.

On the other hand, Controllers are typically not executives but more like accounting managers. They oversee the day-to-day operations of the accounting department and ensure financial reporting is accurate and compliant. Controllers typically earn less than CFOs because their role requires less top-down strategic vision.

Over the past three years, Indeed lists the average base salary for a controller at $104,471 per year. For smaller or growing businesses, the added cost of a CFO may make hiring a Controller a more viable option. However, for larger and more established companies, having a CFO is essential for making strategic financial decisions and ensuring the long-term financial health of the company.

When to Hire a CFO

Hiring a CFO is a significant decision for any company, as it represents a significant investment in talent and resources. Generally, CFOs are high-paid executives who play a critical role in managing a company’s finances and ensuring its long-term success.

CFOs are commonly found in larger corporations and enterprises, where their expertise and strategic thinking are essential for managing complex financial operations. A general rule of thumb suggests that a company should consider bringing on a CFO when they hit $25 million or more in annual revenues.

However, some companies may choose to launch with the CFO position already filled, as having a CFO from the outset can help direct company strategy, establish the right capital structure, and provide guidance to owners. Ultimately, the decision to hire a CFO will depend on the specific needs and goals of the company and its leadership.

Two business people shaking hands over a desk.

When to Hire a Controller?

Hiring a controller can be an excellent option for companies looking to supplement their accounting resources as they grow. A controller can help growing businesses allocate capital wisely, cut costs, and manage accounting data more efficiently.

They can develop more accurate financial reports and provide insights into accounting trends, allowing business leaders to make informed decisions. Additionally, controllers can supervise the accounting team and ensure the accuracy and timeliness of financial statements and reports.

Companies that already have a CFO in place may choose to hire a controller if their CFO is becoming overwhelmed with day-to-day oversight duties. The controller can take on some of these responsibilities, freeing up the CFO’s time to focus on more strategic aspects of the business.

The controller can report directly to the CFO as needed and provide valuable support in managing the financial operations of the company. Overall, hiring a controller can be a smart investment for businesses looking to improve their financial management, streamline their accounting operations, and position themselves for growth.

CFO vs Controller: Which One Does My Business Need?

Both CFOs and controllers play important roles in managing a company’s finances and ensuring its long-term success. While CFOs are responsible for strategic planning, advising the CEO, and overseeing financial operations, controllers focus on managing the accounting department, developing policies and procedures, and ensuring compliance with regulations.

The best choice for your business depends on its goals, budget, and size. If your business is rapidly growing, you may benefit from hiring a controller to help manage your accounting operations and provide insights into accounting trends. On the other hand, if your business has hit a revenue threshold of $25 million or more, you may want to consider bringing on a CFO to help with top-down strategic planning, capital structure, and overall financial management.

Ultimately, the decision to hire a CFO or controller will depend on your business’s unique needs and goals. It’s important to carefully consider your options and work with a trusted advisor to make an informed decision that will benefit your company in the long run.

Is It Time to Take Your Accounting Dept. to the Next Level?

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