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What's the Difference Between a CFO and Controller?

The differences between a CFO and a Controller aren’t obvious to everyone. If they aren’t obvious, how can you decide which position is most suited to your business? This blog will cover not just the differences but will also explain the definitions and responsibilities of each position, along with the similarities.

Businesses of all sizes need to have a leadership structure that best suits their needs. If you get it wrong, it can mean growth targets are missed, management decisions are ineffective and resources aren’t put to best use.

For example, the owner of a small café business might not see any need to fill roles for a CEO or Vice President of Sales.

Ensuring the leadership positions that guide your business are part of an effective structure that supports its growth goals is crucial. There are so many things to think about when running a business, especially during the early years of a startup, so make sure you don’t go through this with your your hands tied. Carry on reading below to ensure you can back the winner when it comes to CFO vs Controller.

Definition of a CFO

What exactly is a CFO? CFO stands for Chief Financial Officer. It refers to the senior executive role responsible for managing the financial aspects of a company.

The duties of a CFO include:

Leadership: A CFO must be a strong leader and have excellent communication skills. A CFO will be required to provide advice and guidance to both senior and junior colleagues, as well as having to help lead the company into growth whilst staying on a strong financial footing. Being able to devise transformational and growth strategies is one thing, but the CFO must then be able to communicate them across the company to ensure their success. This requires CFOs to be concise, clear and accurate in their messaging. Having excellent leadership credentials in this role is critical to the business.

Operational: A CFO should have a strong understanding of the company’s business model. They should also be knowledgeable about the industry segment as a whole and their perspective and knowledge should be able to inform strategic decision making that improves the business operationally. Management decision making will often rely on a CFO being able to understand and interpret complex financial data and communicate these through predictive modelling and scenario creation. The CFO will also support operations within the business by identifying cost controls and maximising profits through profit analysis and competitor benchmarking. CFOs will ensure that their business stays ahead of its industry peers by overseeing and monitoring all financial aspects of business operations.

Strategy: Supporting the business in its development and utilisation of strategy is an important aspect of any CFO. The CFO will need to ensure that strategies and programmes are affordable and do not put financial viability at an unacceptable risk. This will include analysing macro financial trends, along with building and maintaining financial models. At times a competent CFO may need to integrate non-financial information and be able to predict all the possible outcomes of its impact. Strategy needs to be overseen and monitored as well as communicated both internally and externally to interested stakeholders.

Controls: Within the business, it’ll be down to the CFO to ensure that regulatory compliance is maintained. This will include assessing and mitigating risks to ensure that the company is acting within the legal requirements demanded of it. Part of these responsibilities will require rigorous processes for reporting, which need the CFO to show strong leadership and have an excellent commercial and financial understanding of the business in order to interrogate them effectively.

CFOs are important members of leadership in a business model. A CFO will have significant input in all areas of a business's finances, including its capital structure, investments and the day to day management of expenses and income. A CFO may also assist with forecasting and cost/benefit analysis, as well as ensuring funding remains available to support new strategies and meet growth targets.

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Definition of a Controller

A Controller is a person that has responsibility for all of a company’s accounting related activities. The role changes depending on the size and type of business but can include:

  • Preparing financial reports

  • Analysing financial data

  • Overseeing and preparing accounting statements

  • Developing growth strategies

  • Managing the company’s financial transactions

  • Coordinating audits, internal and external

  • Risk management

  • Payroll

  • Budgeting

  • Monitoring established internal controls

  • Streamlining accounting functions and operations

Financial Controllers are tasked with overseeing the day to day accounting functions of a business and ultimately ensuring its financial stability.

Controller functions vary, depending on the scale of the business and the industry it operates within. Smaller businesses depend on a Controller being dynamic and versatile to manage the demands of the role, while larger businesses can split the responsibilities across a range of employees, including the CFO.

Controllers may also be required to help an organisation recruit and train staff. Controllers can be tasked with maintaining the education and professional development of staff by directly managing training opportunities. Controllers themselves are usually already very experienced within an accounting or finance role when they take up the role. The usual functions expected of an accountant are to present historical financial information related to the business and its operation. The duties of the Controller are to predict and understand upcoming concerns to the business. A financial Controller helps a business to structure its costs and to inform capital decisions by understanding the business in terms of its present strength with the market. Controllers can support growth by developing strategic growth strategies and making them attainable through excellent decision making.

A Controller will be in charge of finalising internal audits and focussing on investigating and eliminating errors and frauds. They’ll be in control of financial accounts, including monthly, quarterly and annual accounts. Key insights from the accounts will require the controller to effectively communicate them across other departments in the business.

Depending on the size of the business, it may also fall on the controller to manage cash and oversee accounts payable and payroll functions.

A financial Controller will require a diverse skillset. They will be experienced in accounting, analytical and possess excellent communication skills.

The difference between a CFO and Controller

Above we have discussed the definitions of each position. Clearly, there are overlaps and shared responsibilities, but in this section, we will make clear the differences.

A Controller is more of a tactical role, while the CFO is more strategic. In practice, this really means that the Controller is concerned more with the concrete, tangible steps a business needs to make to achieve its goals. While a CFO is more forward looking, concerned with the longer term goals of the business.

A Controller typically will concern themselves with compliance and reporting, while a CFO may be more focussed on the forecasting and analysis required to support strategy and planning.

Controllers may need to be more disciplined and rigorous to carry out their duties, while a CFO may need to be more creative and innovative.

A Controller prepares and reports on finances within the business. Completing income statements and balance sheets. They also look at the internal controls and manage internal audits.

CFOs are more involved in the higher level financial strategy that defines the future path of a business. They track growth and financial performance and then develop plans to improve outcomes for the business.

As seen above, it can be useful to think in terms of Controllers being accurate financial reporters, with CFOs being creative financial planners. But there can be large overlaps in roles and responsibilities and this very much depends on both the size and nature of the business. In a financial firm, the roles are usually separated and have very clearly defined expectations. In smaller firms, or ones less mature, these roles may be synonymous with one another with large responsibilities placed on individuals or small teams.

How can you decide what your business needs? CFO vs Controller? If you’re still not sure just how your financial management structure should look, we can help.

CFO vs Controller, who can best support your business?

We’ve now covered what CFOs and Controllers are. We’ve looked at the differences between the two and defined them in separate terms to help build your understanding.

When to consider a CFO:

  • You need a senior executive to help with strategic business planning

  • You lack equity and debt expertise in your team

  • Your company lacks a coherent financial strategy and growth goals are diffuse

  • You need higher quality reporting and analysis to support company decision making

  • There are cash shortfalls in your business plan

  • External stakeholder relationships need improving, including investors and lenders

When to consider a Controller:

  • Your current accountancy team could improve from senior oversight and verification

  • Your financial reporting lacks accuracy or you would like to ensure the accuracy

  • The closing of financial periods within your business needs better management

  • Errors and fraud are a concern within the business

  • You’d like to hand over financial responsibilities to focus on strategic decision making

  • Audits need to be introduced or could be managed better

In summary

In this blog, we’ve looked at the roles of the CFO and Controller. There are clear differences between the two, but unhelpfully in some circumstances, the roles can be combined. Some companies may employ one or both of a CFO and Controller. Where both are employed, the Controller would report to the CFO, and this hierarchy is reflected in the fact that CFOs are more strategic in their concerns. Controllers are more involved in the day-to-day processes and functions of the business.

How your business or startup is positioned within its industry and how mature it is will inform your hiring strategy. The unique needs of your business and the elements of it you would like to improve and develop will also help you make a decision.

A good place to start is by identifying the current strengths and weaknesses of your operation. Then consider how your business will develop as it follows its growth plan. With current and future needs in mind, consider who might best complement your business and help you achieve your goals. Accessing financial expertise is important for all businesses, and third party advisors can help in many ways, including helping you bring in the right team.

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Our dedicated finance team are not only experienced, but they possess the capability to help your company thrive. By partnering with us, you can access our market leading accounting services. These services include bookkeeping, tax and R&D tax credit advice. At Accountancy Cloud, we also provide a CFO facility, allowing you to access the full strategic finance support you need, without having the cost of a CFO on payroll. Ambitious companies like yours can access our seasoned CFOs in order to support your fundraising and other strategic plans.

We also offer companies a market-leading full-stack finance function, helping your business leaders in their decision making by providing them access to live information and reporting tools.

Through our motivated and personalised service, we can help you achieve all of your business goals. Talk to us today to see how we can help you.

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