Controller vs CFO: 6 Key Differences to Understand

Then consider whether the company needs a Chief Financial Officer too. They often report to the organization’s CEO or board of directors and oversee the company’s financial controller in addition to other executive-level tasks. The CFO has to make all the critical decisions related to finance like cash flow projections, budgeting, deciding on which project to choose, and also take care of all the impacts of accounting changes. But as one person can’t look after everything, he has divisions who directly report to him. One of those important divisions is that of a controller responsible for mainly managing the day-to-day finance operations, including accounts receivables and accounts payable.

• For many companies, supplies are secondary only to labor in their expenses.
• If you prefer to do the math for yourself check out our full-time vs fractional CFO calculator.
• The fifth difference between CFO, finance director and controller is about the focus of their duties or their experts.
• One of the questions we get asked most frequently about financial roles and responsibilities is “What is the difference between a Controller and a CFO?
• The Association of Accountants and Financial Professionals in Business, the role of a Financial Controller has become increasingly strategic and essential in the last ten years.

Understanding the difference between a controller and CFO empowers owners to make strategic hires while benefiting from the full potential of these two experts. TWhile there are functions of both a controller and CFO that support each other, both positions make distinctly different contributions to the organization. A business owner may need help with financial strategy such as pricing decisions, long-term projections or strategy formulation/refinement. The CFO becomes part of the executive team and participates in – and often leads – important planning sessions.

How Much Does a CFO Make?

The main difference between these two jobs is the range of their focus—CFOs look at the big picture while controllers focus on the minute details of a company’s financial plans. In H&M India, “Controller – India” reports to “Country Manager / CEO – India”. Its planning and decision-making for the future course of business are set by the senior executive team located in Sweden.

For instance, if you are planning to raise capital, look for a CFO who has successfully led such an effort in the past. Furthermore, if you can find a CFO who has built a company of their own, all the better. Such a candidate will be uniquely equipped to understand the pressures of the CEO position and offer sage advice.

Where does a CFO work?

The biggest distinctions can best be described by breaking down the operations and responsibilities of each role. In this article, we’ll look at the three key differences between these positions. We’ll address their scope, daily responsibilities, and hierarchy to help give you a better understanding of how CFOs and controllers impact your company.

The Chief Financial Officer , on the other hand, analyzes your financial and operational performance from the context of your business goals. Then they use that information to provide strategic insights to guide your business decisions. Both roles are important, but controllers must focus on today’s details, while CFOs plan for the future. At some companies, financial controllers are involved in evaluating and selecting technology for use within the finance department or other related departments within the organization. A Financial Controller is a senior-level executive responsible for a company’s financial management.

A controller usually has strong bookkeeping or even CPA experience. They help ensure financial statements are complete, accurate, and presented within GAAP standards. It is quite possible that you’ve seen other businesses with CFOs and controllers who have the exact same responsibilities. Hopefully, by the time you’re done reading this post, you’ll have a clear understanding of what these roles typically cover, where they sometimes overlap, and how you can plan out the makeup of your finance team. The CFO, with top responsibility for all financial functions, reports to the Chief Executive Officer . A useful Chief Financial Officer performs a strategic finance function and contributes to raising financing, completing M&A deals, and improving business metrics and performance.

When to Hire a CFO

Additionally, the CFO reports to the CEO and is part of the organization’s senior level / executive team. A controller or comptroller oversees the finance department and reports to the CFO. No matter what stage your company is in, it’s crucial to have a team in place that can help with making sound financial decisions. With so many titles such as CFO, controller, and comptroller floating around, it’s not always clear what roles a finance team should be comprised of.

The need for a CFO and finance controller depends upon the requirements of your Company/organization. As said earlier, while they are separate from each other, each play a crucial role in making a business successful. Therefore as an entrepreneur, you should be aware of the differences between the two. The role and responsibilities of a CFO have expanded in the past two decades, according to the International Federation of Accountants.

If you’re still not sure whether you need a controller or CFO, consider the points below. As a separate consideration, if what you really need is tax strategy–minimizing tax burden, keeping records, and filing taxes, then you may actually be in need of a CPA. The Controller helps to support a CFO by providing the numbers that the CFO can use to drive action and strategy.

This might take the form of changing a revenue model, moving into international territories, or analyzing the possibility of a merger or acquisition. Hiring a CFO is a huge investment as they command high salaries and expect top-tier benefits. Easily store, retrieve, and route documents for accounting and operations. Build bids quickly and precisely, plus integrate with other Sage software solutions to streamline operations. The all-in-one construction software that goes beyond basic accounting to put you in total command of your projects.

Does Your Company Need a Controller or a CFO?

This person will have many of the same qualifications as a how to calculate sales tax, which is why we often get questions about the controller vs CFO role. Strong knowledge of general and industry-specific accounting standards and government regulations is a must. If you prefer to do the math for yourself check out our full-time vs fractional CFO calculator. Auditing of your historical financial information to ensure that it’s reliable and compliant. If Your Company Doesn’t Have a Financial Forecast, You’re Wasting Time and Money Every company has goals. Most even have a general idea of the benchmarks you need to hit to get there—”By increasing…

A CFO’s role is more strategic, helping drive the company’s future, while a controller’s role is more tactical, assisting with the day-to-day operations of the finance and accounting departments. While controllers focus on looking in the rear-view mirror to see what has happened through historical data. The differences between the two are more than just a matter of semantics. CFOs are the highest-level financial professionals in a large organization.

The Benefits of Hiring a Virtual CFO and Financial Controller

Bonuses, employee benefits, and equity compensation, including stock options, are extra compensation. The CFO should have a big-picture understanding of the business and accounting, even if they don’t have a specialized accounting background. They should be able to optimize the capital structure, prepare business plans, investor decks and presentations, and obtain financing. Fractional CFOs are an attractive option for small businesses or startups that can’t afford a full-time CFO.

The FP&A team helps the CFO forecast and then leverage the analytics to make business decisions. An entry-level vice president of finance makes $95,800, rising to $109,000 at mid-career and $144,700 by the later stage of their career. According to the comptroller job description, a comptroller should have at least a four-year degree in accounting or business administration or equivalent business experience. Beyond that, 10 years of experience in accounting is preferable, showing steadily increasing responsibilities. Becoming a Certified Public Accountant is a major asset to a comptroller career.

By outsourcing our finance and accounting department, you get the benefits of both professionals for less than the cost of a single full-time employee. Most companies bring in a financial controller when they need to generate accurate, timely financial statements that comply with GAAP. Chief financial officers and financial controllers have a lot in common — and some significant differences, too. In midsize to large companies, they can be a dynamic duo, working hand-in-hand to put a company on its best possible financial footing. Whether or not now’s the time to add a controller or CFO, don’t forget the value of the objective expert advice offered by EFA CPAs and other professional advisors. We can provide critical support to you and everyone on your construction company’s management team, contact us today.

Start a Conversation with a CFO

The CFO is traditionally ranked just below the CEO in terms of hierarchy. The controller reports to the CFO, sometimes alongside the treasurer and tax manager. If there is no CFO, the controller must handle many different financial tasks, from routine bookkeeping to financial planning. Smaller companies tend to opt for one role or the other, often as a matter of controlling labor costs. Other firms, especially startups, may outsource one or both finance functions or hire fractional or interim professionals.

A controller looks after the accounts, while the CFO has to be aware of all the business operations in a company that relates to the controller’s accounts. In addition to understanding the interrelation of the financial system. While the controller is the head of the accounting in a company, the CFO is responsible for, and has to observe every financial and operative function of the organization. The Chief Financial Officer has a much larger role in an organization than does a financial controller. The average cash compensation for a CFO in a private company with less than $20MM in annual revenue is $194,354.

They also assist their subordinates to be more productive to help the company grow. CFO reports directly to the CEO or the Board in most cases, but they remain one of the highest positions in the company. CFO is often assigned to help CEO make forecasts, do cost-benefit analyses, or track revenues and expenses. We are here to help guide you through the outsourced accounting process and to answer any questions you may have. With decades of experience and hundreds of clients, Plumb is here to support you as you take your business to the next level. Please let us know if you’d like to schedule time for a free consultation.

• Each benefits from an educational background in accounting, such as Maryville University’s online Master of Science in Accounting, which includes courses in managerial accounting, auditing, and financial reporting.
• The bottom 10% earned around $68,000, while the top 10% earned as much as $208,000 each year.
• The controller reports to either a CFO or CEO and supervises staff accountants and bookkeepers.
• The Controller function typically reports to the CFO and is just one element of the CFO’s role.
• This includes ensuring that the P&L, cash flow, and balance sheets are accurate and finished on time.
• A comptroller is the top manager of accounting, budgeting, and financial reporting functions, usually in a governmental entity or non-profit organization.

A CFO should be familiar with best accounting practices but isn’t necessarily a CPA. The biggest difference between a controller and a CFO is that a controller manages and measures historical financials while a CFO strategizes and executes a forward-looking financial strategy. A controller’s main duties include organizing your existing books, keeping them in order, and providing timely and accurate financial reporting and analysis. Conversely, a CFO provides high-level strategy to improve profitability, accelerate growth, maximize assets, minimize inefficient activities and spend, and increase shareholder value. CFOs tend to be involved in higher-level financial strategies and planning.

Depending on the size of your business and its stage of life, the role you choose for that leader might be a controller, CFO, or both. The clarity we provided above can help you make the right choice, but taking action is vital. Don’t wait until you have unchecked growth or are ready to investigate an IPO before getting a financed-minded person on your team to help guide strategic decisions. While they are separate from each other and each plays a crucial role in making a business successful, the CFO and Finance controller work closely. Without the controller, the CFO may miss out on getting accurate financial data which is required to make decisions. As their analysis and strategy is based on accurate financials, the CFO is responsible for the controller’s performance.

By the same token, if you already have a controller and he or she is struggling to keep up, it might be time to add a CFO. Controllers and owners alike can find themselves stretched too thin trying to track the company’s finances and make strategic moves to grow the business. If you lack the resources or don’t want to bring someone in-house, outsourced controller or CFO services can be an effective solution — either permanently or until you’re in a position to hire someone. You might also engage a CFO/ consultant on a short-term contract to help you target a strategic direction. A financial controller is, in essence, a company’s lead accountant.