Controller or Chief Financial Officer: Which Will Elevate Your Business?
Updated: 4 days ago
Who Manages Your Financials?
As a small business owner, you know that you need to pay attention to your finances.
There are bills to pay, payroll to process, and quarterly tax payments that cannot be missed.
If you have external lenders or investors, you most likely are submitting quarterly or annual financial statements. This provides your stakeholders with insights on business performance and financial health.
How do you manage this?
With an onsite bookkeeper or accountant? Through an outsourced bookkeeping or CPA professional?
But when is the right time for a more seasoned professional, such as a controller or a CFO?
Titles can be misleading at times, especially in smaller organizations. You may have come across individuals that claim to be a ‘Jack of all trades’ - someone that can serve as your bookkeeper and CFO.
WARNING - This does not work. Someone cannot process your payments while maintaining a higher-level strategic mindset.
Let’s take a look at how each of the roles compare along with when your business may require the services of each position.
The bookkeeper is responsible for recording all financial transactions for the business. These transactions are the foundation of your financial statements.
Therefore, it is extremely important that your bookkeeper is focused on accuracy and timeliness.
Education & Experience
You do not need a formal degree to be a bookkeeper
However, experience is a must. If you are looking for a bookkeeper, you want someone who has worked with a large number of clients
While this is a very transactional position - do not discount its importance. Transactional accuracy is the bedrock of having accurate financial statements
While there may be certain nuances in transactions by industry, specific industry experience is not going to be as important as is the case with more senior positions
Technology & Automation
Anything that is either recurring or frequent in nature is ripe for automation. This is at the heart of the bookkeeper role
Cloud based accounting tools include automations bigger companies have been using for years. This is now available to companies of all sizes
Technology won’t necessarily eliminate the position (but this could happen as tech continues to progress), but bookkeepers who use tech can take on additional accounts
Be wary of any bookkeeper who is not up-to-date on the latest technology trends
When Does a Bookkeeper fit Your Business?
You need to record you finance transactions from day one. Unless you, as the business owner, are an experienced accountant, outsource this to a bookkeeper immediately
Note - even if you are experienced with accounting, this is not the best use of your time when scaling a business
A bookkeeper should only be your sole financial resource during the very early stages of growth
However, if you expect rapid growth from the onset, a bookkeeper maybe never be your only resource
The Controller and External CPA
The controller sits at the intersection of detail and consolidation. This individual oversees all accounting processes and is responsible for accurate financial statement preparation, audit and tax compliance.
A strong controller will also understand your business and be able to provide insights into the financials.
Education & Experience
A controller must have an accounting or finance degree. A thorough understanding of the foundational concepts of accounting is necessary to be able to understand more complex issues
Additional certifications are common including either a CPA (Certified Public Accountant), or CMA (Certified Management Accountant)
The role goes beyond the pure transactional side to include a thorough understanding of the financial statements and GAAP (Generally Accepted Accounting Principles)
Must have an understanding of what is required for various tax filings (both state and Federal)
Industry experience is a plus as there are accounting nuances that are industry specific
Technology & Automation
This is a position that will be greatly assisted by technology, but will not be replaced
Technology and automation will greatly assist in financial statement generation but not the entire review process
Greater use of technology allows the controller to be more business focused, drive a better understanding the numbers, and to keep up-to-date on the latest accounting standards and practices
When Does a Controller fit Your Business?
You need the services of a controller as soon as you begin adding complexity to your business
Complexity can include large amounts of inventory, multiple locations and tax jurisdictions, or needing to scale the size of the accounting team
The controller should not be confused with an independent CPA you may be using for tax advice or audit purposes. This individual must remain completely independent from your organization
The chief financial officer (CFO) has full responsibility for the company’s finances including financial reporting, internal controls, financial planning, and financing.
The position is strategic in nature and spends increasingly more time focused on the future and stakeholder relationships.
Education & Experience
CFOs will often, but not always, have an advanced degree such as an MBA (Master of Business Administration)
The CFO must have experience across numerous facets of the finance spectrum including financial planning and analysis (FP&A), controller roles, treasury roles, and mergers and acquisitions (M&A)
Significant industry, or related industry, experience is important. The CFO must understand the business environment as part of a strategically-focused mindset
The CFO is accustomed to working with other functional leaders as part of the business leadership team
The CFO must have strong presentation and communication skills. This individual works closely with board members and investors and is the financial face to your company
Technology & Automation
Technology benefits the CFO as it benefits the entire finance team. This includes reduced error, greater efficiency, and improved analytics
With the presence of real-time dashboards and analytics, the CFO is able to check the performance of the business more frequently
This position is not going away. However, the CFO role continues to evolve from that of head of finance to head of strategy
When Does a CFO fit Your Business?
You need a CFO the moment you realize that scale is part of your strategy
You need a CFO when you start requiring external financing
You need a CFO when you are working with a board and investors
You need a CFO when you are focused on strategy instead of remaining trapped in the past
Building out a full internal finance team may not make sense for your business.
It may be cost prohibitive to add an in-house team when you factor in salaries, benefits, and insurance. You may be better suited allocating resources elsewhere to support your growth.
Additionally, depending on the size of your business, you may not need a full-time financial resource.
However, you must still invest in your finance strategy. Without access to the right level of expertise and insights, you are operating in the dark.
By engaging fractional professionals, such as a fractional CFO, you have access the high-level of expertise your business requires without burdening your business with the costs of a full-time employee.
Now, Let's Get Going!
Let’s briefly recap what we have discussed.
As a small business leader, you realize that financials must be managed
Bookkeepers can provide you with transactional level support in your early stages
Controllers provide you with expert-level accounting advice as you grow in complexity
A CFO is the strategic partner you require to grow your business and remain financially sound
There are fractional offerings available to support businesses of all sizes
If your business has growth aspirations, you need the added expertise that comes with adding a CFO. A Fractional CFO offers you the flexibility to scale this added skillset to match your business growth.
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About Colin Murray
Colin is an experienced finance executive with over fifteen years of diversified experiences for companies spanning multiple industry segments and ownership structures. Colin has built a career on transforming finance teams into business partnering organizations with a focus on continuous improvement.
Prior to founding Your Weekly CFO, Colin was the CFO of a private-equity backed manufacturer. Previous roles including heading finance for multi-national business units of public companies.
Colin has bachelors degree in finance from Miami University and an MBA from The University of North Carolina at Chapel Hill.
About Your Weekly CFO
Your Weekly CFO is a boutique CFO Advisory Services Firm specializing in Finance Performance Improvement (FPI). FPI allows clients to extract maximum value from their existing business while increasing projected returns on future business through strategy alignment, and people and resource development