When to hire a CFO vs. controller
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When your company advances beyond the early-stage startup phase and reaches maturity, you need help handling the company’s financials and driving the company forward. As a business owner, you need someone who can go beyond basic accounting and manage financial planning and analysis (FP&A)—someone who has a deep understanding of the company’s business model and cash flow.
But do you hire a CFO, a financial controller, or go with outsourced controller services? These two financial leadership roles work closely together, but they are actually distinctly different jobs. Let’s first establish the basic responsibilities of each role, then dive into the factors you should consider to determine whether it’s time to hire one, the other, or both.
What is a CFO?
The Chief Financial Officer (CFO) of a company is a strategic leader tasked with oversight of all the business’s financial obligations, including financial forecasting, planning, and analysis. Their chief tasks include:
- Management of the finance function
- Advising the CEO
- Strategic FP&A & growth planning
- Fundraising & capital markets
The CFO is part of a company's senior management team and reports to the CEO of the company and the board of directors. They act as the chief financial spokesperson. As an intermediary between management and operations, the CFO often partners with the Chief Operating Officer (COO) to identify significant business risks and opportunities. Together, they coordinate decision-making, address company needs, and steer the company down the optimal path for growth.
While the CFO is the primary person in charge of a company’s financials, the role goes far beyond that. They must also review financial statements, then analyze that data to discover new ways to drive performance.
A large part of their job involves anticipating business risks and then taking the proper actions to mitigate those risks. In addition to providing the business with its forward momentum, they also advise key stakeholders on critical company decisions. Oftentimes, a good CFO will take the lead in finding creative ways to fund key business operations.
At what stage of growth do companies hire a CFO?
Driven Insights estimates that most businesses won’t need the services of a CFO until annual revenue reaches at least $1M. Even larger companies who make that much would likely depend on a part-time CFO or outsource their CFO services.
Typically, a business won’t enlist the services of an in-house CFO until they reach approximately $50M. In some cases, investor-backed companies with more sophisticated needs may hire an in-house CFO at around $30M mark.
What is a controller?
A financial controller is a senior-level executive with a deep accounting background, responsible for overseeing all of the business’ accounting activities, and ensuring that money flows in and out of the business smoothly and legally. Their foremost duty is to ensure that financial accounting and reporting are accurate. As the head of the accounting department, they’re focused on company compliance.
If there is a CFO, the controller reports to them in addition to managing payroll processing, financial reporting, and assisting in building operational budgets.
In the past, a financial controller was a manager charged with running a company’s bookkeeping and accounting. That said, the scope of a financial controller’s responsibilities has grown and expanded over time. Now controllers oversee the overall financial health of the business. It’s still important that they’re crunching the numbers and intimately familiar with the company ledger, but these days, they play a much larger part in influencing the company’s financial trajectory. This includes:
- Accounting team management
- Financial processes & reporting
- Internal spend controls
- Cash & equity management
- Payroll & taxes
- Budgets & forecasting
At what stage of growth do companies hire a controller?
Like a CFO, most businesses will benefit from a part-time controller when they reach the $1M revenue mark and need to start providing audited statements to their financial partners. The vast majority of businesses will have an in-house controller by the time they’re earning $10M.
For businesses between $1-10M, an in-house controller would likely play the dual role of quasi-CFO and bookkeeper supervisor. After the business scales past $10M annual revenue, their time is mostly consumed with generating financial reports, managing internal controls, and supervising the accounting department. However, if you are a small business, this role will be someone who can do multiple jobs within your financial operations.
CFO vs. controller: The major differences between the two roles
Although there is quite a bit of crossover between the two roles, especially for smaller companies, the larger the business gets, the more distinct the jobs become from one another. Here are the key ways they differ.
Scope of roles
- CFO: A CFO is the company’s financial strategist. They leverage past financial statements with current projections to make calculated business decisions and investments. They have one goal in mind—to drive the company forward.
- Controller: A controller is responsible for the accuracy of the company’s financial accounting and reporting. By optimizing accounting procedures, the controller helps improve the company's profitability, particularly when it comes to tracking business expenses.
A CFO's day will comprise the following:
- Management: Overseeing strategic financial management, including accounting and other finance operations
- Transactions: Ensuring payroll, accounts payable, and accounts receivable are accurate and paid on time
- Financial strategy and forecasting: Making decisions to improve inefficiencies or fund strategic investments based on analysis of financial records
- Treasury: Managing the company’s capital status and determining the best options for investing money or dealing with debt and equity
- Reporting: Ensuring that financial reporting is accurate and on time to guide management decisions
Controllers will focus on these tasks:
- Management: Supervising the accounting function overall
- Transactions: Ensuring payroll and accounts payable and receivable are accurate and paid on time
- Reporting: Ensuring that financial reporting is accurate. Control the ledger, monitor debt, and understand tax issues.
- Compliance: Responsible for monitoring debt, creating policies to improve internal control, and educating the organization to abide by those policies
Hierarchy and payscale
- CFOs: If a company’s finances were a ship, the CFO would be the captain, and the controller, the quartermaster. According to Strategic CFO, the average maximum salary for a Chief Financial Officer is $237,051.
- Controllers: According to Strategic CFO, the average maximum salary for a financial controller is $126,373. In terms of the company’s hierarchy, they’re typically on even par with finance directors and accounting managers.
Reasons to hire a CFO vs a controller
Depending on your company’s financial size, specific needs, and future plans, you may need to hire a full-time CFO, a controller, or both.
A company hires a CFO for:
- Oversight of the finance team
- Financial strategy and guidance
- Reporting to stakeholders
- Analyzing financial metrics
A company hires a controller for:
- Bookkeeping supervision
- Improving financial reporting speed and accuracy
- Improving month’s end close
- Reducing errors, fraud, or security breaches
- CPA support
- Greater ownership over the company's accounting processes and financial system
Ramp: A CFO or controller’s best friend
Whether you have a CFO, controller, or both, finance leaders need all the help they can get when it comes to managing and monitoring spend.
Ramp is the only corporate card that comes with built-in automated expense management, helping you gain greater control over your spend.
According to Aron Susman, CFO at healthcare company Ro, “With Ramp, I can put money in my employees hands and be confident that spend is controlled and reviewed. No other card company has tried to help us spend less. That alignment is incredible when your business is trying to grow and make a profit at scale.”
Irish Rose, DTC technology company Eight Sleep’s controller, adds, “Closing the books with Ramp is effortless. Now expenses, payments, and accounting are all integrated.”
Savvy CFOs and controllers can leverage Ramp’s controls and insights to strengthen their finances and propel their company forward.