Does My Small Business Need a Controller or a CFO?

You’ve heard the saying. It goes something like, “Growth is a good problem to have.” This may be true, in theory, but growth that occurs too quickly can put your small business at risk.

You’ve heard the saying. It goes something like, “Growth is a good problem to have.” This may be true, in theory, but growth that occurs too quickly can put your small business at risk. A recent article illustrates how financial controls and cash flow can be risk factors occurring as a result of high growth. Could an outsourced turn key accounting service or an outsourced controller be the answer? Here we discuss the difference between the two and when it may be appropriate to engage both.

If you’re questioning whether your small business may need help with financial management, consult with Pine & Co CPAs. We offer both outsourced controller and turn key accounting services, to help your business gain the financial leadership it needs to continue building on its success. When you’re ready, reach out and schedule a meeting with us.

What is the difference between a CFO and a controller?

Both CFOs and controllers generally begin as accountants with a CPA designation. However, this is usually where the similarity ends. Perhaps the easiest way to differentiate between the two?

  • A controller looks at the history of a business’ operation.
  • A CFO looks to the future of the operation.

Specifically, a controller is responsible for the timely and accurate reporting of the financial performance of the company, including accounting entries and reconciliation. The CFO, however, thinks strategically about how to position the company financially as it moves into the future, including how to troubleshoot potential upcoming challenges.

Depending on the size of a company, a controller will either perform all the accounting functions including accounts payable, accounts receivable, bank reconciliation and financial reporting or they will oversee and manage the individuals who perform these functions. Either way, the controller is ultimately responsible for these tasks. A controller will also provide requested information for tax filing, follow the rules that govern and regulate business accounting practices and ideally spot any inconsistencies with accounting.

A CFO, on the other hand, is much more strategic as opposed to analytical. A CFO should be able to account for scalability, have a thorough understanding of business operations and how finances interrelate, have a firm grasp on cash management, and be able to identify myriad risks and how to effectively mitigate them. A CFO plays an important role in advising and making decisions that can impact the health, performance and growth of a company. If a company had both a controller and a CFO, the controller would report up through the CFO.

Here is a table to help illustrate the difference between the two roles of CFO and controller:

CFO Versus ControllerCFOControllerStrategicAnalyticalForecastingReportingBig Picture ViewDetailed Financial ViewLong-term ViewPoint in Time ViewProjections and PlanningDay to Day Operations and ReportingC-Level Executive LeadershipMore Managerial

A controller may or may not have the strategic skills and business acumen necessary to become a CFO. The two functions really require different aptitudes. In other words, what makes a successful controller may not necessarily make a successful CFO; that means that, often, a transition from controller to CFO may not be effective. The extent to which controllers can make future projections and provide strategic planning and advising largely depends on their individual skill set.

Should I Hire a Controller or a CFO?

Small business owners often begin their companies themselves or with a few employees who may or may not understand accounting. Using self-serve accounting software can help get a small start-up through its initial stages, but a qualified financial professional will be necessary as the company grows. But which financial professional and when? These are important questions to ask.

A controller may be right for your business if you’re lacking a well-organized bookkeeping process, or lack a dedicated financial professional. As a company grows, keeping the accounts up-to-date becomes more than a part-time role. Before you hire a CFO, it’s often wise to have a controller in place so that your basic accounting needs are covered.

A CFO may be right for your business if your historical financial records are sound, but you’re in a state of transition. Maybe you’re transitioning from a small to mid-sized business. This can be a good time to hire a leader who can help lay the foundations for a successful financial future. A CFO can handle your business’ investments, mergers or acquisitions, and other financial complexities that come with business growth.

What are common challenges in creating these roles?

In a controller role, it’s important to note that you should not have the same person making accounting entries and reconciling the books. There should always be a separation of duties to mitigate risk and avoid dishonesty and theft. Additionally, if you only have one person responsible for all of your accounting, you’re put in a tight spot when that person goes on vacation or unexpectedly quits.

For the CFO role, you may consider leveraging someone who has experience with mergers and acquisitions, positioning a company to be bought or going public. In addition, hiring for this role often requires substantial financial investment and incentives such as stock and benefits, which may be cost prohibitive.

What’s the benefit of seeking an outsourced controller or turn key accounting service?

An outsourced controller or outsourced turn key accounting service can be viable options depending on your company’s goals, operations, lifecycle placement, and strategic planning. First, these positions take some of the risk out of your hands and place it with the outsourced agency. This can provide a protective layer of liability, and separation of duties between internal and external functions. Second, the cost associated with outsourcing these roles is generally less than hiring a full-time employee, especially if you know the need is short term. Third, you can easily check references for a person or organization providing these services to get a sense for their ability to perform.

If you have questions about outsourced turn key accounting services and controllers, we are here to help! The goal of Pine & Co. is to provide your business with the financial support and technical expertise you need to succeed. Contact us to schedule an appointment and to learn more about our outsourced controller and turn key accounting services.

Do you have more questions?

Schedule a consultation with Mike and his team today.

Stop being anxious about your financial future. Choose Pine & Co CPAs as your tax strategist so you can keep as much money as possible, grow your wealth, and have more time for the people and hobbies you love.

Minimize your taxes. Maximize your wealth.