When to hire a CFO vs. controller
When a company reaches a certain stage of maturity, executives need help handling the company’s financials and driving the company forward. They need someone whose primary responsibility is financial planning and analysis—someone aside from the accountant.
This brings us to the CFO and financial controller, two finance-leadership roles that work closely together. Although there is some crossover, they are distinctly different jobs within the financial management team. Therefore, it’s critical that you know the difference between a CFO vs controller so you can determine whether it’s time to hire one, the other, or both.
What is a CFO of a Company?
A Chief Financial Officer (CFO) is a strategic financial leader tasked with oversight of all the business’ financial obligations, including forecasting, planning, and analysis. The CFO supervises the FP&A team (which the controller is a part of).
CFOs are senior managers in charge of overseeing the company’s finances and financial activities. Their chief tasks include:
- Financial risk management
- Financial planning
- Financial reporting
- Record keeping
- Data analysis
- Check signing
The CFO responsibilities include a broad range of financial-related business operations. They typically report to the CEO of the company, the board of directors, and act as the chief financial spokesperson. As an intermediary between management and operations, the CFO will also coordinate with the chief operating officer (COO) to identify significant business risks and opportunities. Together, they can make the proper decision, steering the company down the optimal path for growth.
While a 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. Sometimes, they’ll have to take the lead in finding creative avenues for funding the business’ activities.
What Size Companies Hire a CFO?
Driven Insights estimates that most small companies won’t need the services of a CFO until annual revenue reaches at least a $1M threshold. Even for 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 the $30M mark.
What is a Controller?
A financial controller is a senior-level executive charged with overseeing all of the business’ accounting activities, and ensuring that money flows in and out of the business smoothly and legally. If there is a CFO or an accounting officer currently overseeing the company's finances, 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 have continued to grow and expand as the role has evolved. 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:
- Compliance audits
- Monitoring internal controls
- Participating in the budgeting process
- Analyzing financial data
Depending on the size of the business, there can be plenty of overlap between a controller and CFO. For larger companies, the controller reports directly to the CFO. In terms of the company’s hierarchy, they’re typically on even par with finance directors and accounting managers.
A controller’s foremost duty is to ensure that financial accounting and reporting is accurate. As the head of the accounting department, they’re focused on company compliance. Because of this, Business Insider notes that a “controller role is a natural progression from accountant; however, CFO is not necessarily a natural progression from controller.”
What Size Companies Hire a Controller?
Like a CFO, most businesses will benefit from a part-time controller when they reach the $1M revenue mark. 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 a 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 owner, this role will be someone who can do multiple jobs within your financial operations.
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. For a growing enterprise, the most significant differentiating factors between CFOs and controllers include:
- Scope of the roles
- Daily tasks
- Hierarchy and payscale
Scope of Roles
A CFO acts as the company’s financial strategist. They are the big picture player, leveraging past financial statements with current projections to make calculated business decisions and investments. Such actions have one goal in mind—to drive the company forward.
A large part of their job involves identifying the 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 about the critical company decisions.
A controller, on the other hand, is responsible for tending to the business’ financial minutiae, implementing daily accounting tactics necessary to improve the accounting department. By optimizing accounting procedures, the controller helps improve the company's profitability, particularly when it comes to tracking business expenses.
When the job is done correctly, the controller supports the CFO, helping them carry out their strategic goals.
On a day-to-day basis, a CFO has five primary responsibilities:
- Management – Supervising all accounting and finance department operations and implementing accounting procedures, processes, and policies.
- Transactions – Ensuring payroll and accounts payable and receivable are up-to-date, accurate, and paid on time.
- Financial strategy and forecasting – Reviewing and analyzing the company’s past and present financial records, making decisions to improve inefficiencies or allocate funds towards strategic investments.
- Treasury – Overseeing the company’s capital status, then determining the best options for investing the money or dealing with debt and equity.
- Reporting – Ensuring that financial reporting is accurate and on time. Financial analysis can help guide management decisions.
Similarly, a controller supports—and reports directly to—the CFO. Their primary responsibilities include similar areas of management, transactions, and reviewing financial reports. In addition, they’re responsible for monitoring debt and compliance.
To be a controller, a candidate needs the ability to control a ledger, manage accountants, and understand tax and reporting issues. But it goes far beyond being a simple number cruncher. A controller needs to be a self-starter, organized, and able to convince the rest of the company to abide by the policies and procedures.
Hierarchy and Payscale
As mentioned, the CFO is higher up on the company totem pole than the controller. They’re in charge of managing the company’s larger fiscal direction. The controller is the executive in charge of managing the accounting department. If a company’s finances were a ship, the CFO would be the captain, and the controller, the quartermaster.
Because a CFO is higher up in terms of a company’s overall hierarchy—compared to a controller—the pay is better. According to Strategic CFO: “Because the CFO has more responsibilities assigned to the job, the pay is also better as well. The average maximum salary for a financial controller is $126,373 while the average maximum salary for a Chief Financial Officer is $237,051.”
Reasons to Hire a CFO or a Controller
Depending on your company’s financial size, specific needs, and future plans, you may need to hire a 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
- Improved financial reporting speed and accuracy
- Improved month’s end close
- Reduction of errors, fraud, or security breaches
- Optimized CPA support
- Greater ownership over accounting processes
Ramp: A CFO or Controller’s Best Friend
Whether you have a CFO, controller, or both, they need all the help they can get when it comes to monitoring and reporting their expenses.
Ramp is the only corporate card that comes with built-in automated expense management, helping you gain greater control over your spend. According to JJ Fliegelman, founder of WayUp, “Automation is Ramp’s ultimate weapon. I was skeptical at first but when I started using it, I realized it was as beautiful as it sounds.”
Savvy CFOs or controllers can leverage its heightened visibility to strengthen your finances and propel the company forward.