What is The Difference Between CFO and Controller?

Help Local Businesses to Grow

The secret to success is making wise business decisions based on reliable financial information. You can be in charge of your own financial reporting, planning, and bookkeeping responsibilities as a small business owner.

But, a top-notch financial strategy needs concentration and knowledge. A finance team including a controller and a chief financial officer (CFO) is present in large organizations. What does your organization need?

How do these responsibilities differ from one another? While they collaborate often, the CFO and the financial controller play quite distinct functions inside a corporation. The operations and duties of each position should be broken out in order to effectively explain the most significant differences.

What is a controller? 

A firm executive who oversees all accounting-related operations is known as a controller. If there is a CFO for the firm, they normally report to him or her. A controller will handle financial reporting and payroll processing in a bigger firm, and they may work with the CFO to create operating budgets.

The controller is often a senior manager with a keen sense of numbers and formal accounting training. The controller, also known as a comptroller in government and nonprofit organizations, is in charge of managing the day-to-day operations of the accounting department and keeping correct books and records.

What is a CFO?

The chief financial officer (CFO) is in charge of a company’s entire financial strategy. The scope of a CFO includes general market circumstances, competitive analyses (in some situations), and the equity structure of the business.

The CFO oversees all financial activities, including future financial activities like budgeting, forecasting, cash flow, mergers, and investments as well as the past accounting procedures supervised by the financial controller, if there is one.

The fact that CFOs are the only other corporate leader with a focus on the entire organization is crucial since they serve as the CEOs’ top advisors. The great majority balance duties that go beyond finance and accounting, such as developing strategic alliances, assessing technology, and representing the business in public settings.

Key differences between a CFO and a controller 

Now that we have a gist of the basic roles and functions of both operators, let’s look at what is the difference between a Controller vs CFO.

1. Scope of roles

The CFO is a company’s head of finance and chief financial strategist. CFOs are crucial in setting a company’s future course and advising stakeholders on crucial commercial choices. CFOs need a deeper grasp of finance than is necessary for the controller role.

Despite the lack of specialized accreditation for the position, investment banking or company management experience is frequently a need. They place a lot more emphasis on capital markets, investment, and financial planning than they do on the regular accounting work required to keep their business running effectively.

On the other hand, the execution and day-to-day administration of the accounting department’s activities are handled by the controller. They provide controller services, which is the name of the task they undertake. The CFO is able to accomplish the company’s strategic goals thanks to the controller’s monitoring and account management.

As they are professionals in accounting, controllers must uphold compliance with all current Generally Accepted Accounting Standards (GAAP) and tax laws. This is a technical position that calls for alertness, focus, and accuracy.

2. Responsibilities

Financial controllers are mostly professionals in accounting. They are in charge of generating financial statements that direct the development of the business. At a high level, a controller’s duties include being an implementer of strategy, an operator who maintains internal efficiency, and a custodian of the company’s assets in addition to contributing to the strategic plan for growth.

The capital structure and portfolio management responsibilities of the CFO are broader. CFOs are in charge of reporting, forecasting, ROI, and liquidity on a larger scale.

3. Hierarchy

If the controller position is vacant, the accounting department can be losing out on important chances. Also, it’s possible that the CFO may put in extra effort to gather all the data required to make informed judgments.

Similarly, without a CFO, the firm can overlook the bigger financial picture and lack a reliable estimate for its future cash flow. According to the conventional structure, the CFO is placed slightly behind the CEO.

The controller, occasionally in addition to the treasurer and tax manager, reports to the CFO. Roles like accounting manager, financial planning manager, accounts receivable manager and accounts payable manager can be found underneath the controller. 

Should you outsource a controller? 

The cost of recruiting outsourced controllers is probably lower than hiring internal ones: Hiring an internal controller requires a more time-consuming procedure that includes interviews, background checks, and even recruiter fees in addition to lengthy contracts, perks, and incentives. Both are seasoned controllers who will provide your accounting department with financial outcomes reports. 

You could concur that, at least when your business is still young, it’s simple to see how one individual might perform both duties concurrently. The distinction between a CFO and a controller appears insignificant at first because of how much their tasks and responsibilities overlap.

Yet when the company expands, both of these soon become necessary. A CFO is a priceless investment if you require a point person for financial strategy and a face for fundraising or investment. A controller who can guarantee accurate financial reporting that serves as the cornerstone for future planning and growth is as crucial, if not initially more so.