Do You Really Need a CFO or Controller, and What’s the Difference?
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Do You Really Need a CFO or Controller, and What’s the Difference?

by Steve Barrington
August 13, 2021

For a growing organization, one of the most critical questions is “what skill sets do we need, and when do we need them?” The correct answer can mean the difference between extending and accelerating momentum, and stalled progress with onerous overhead expenses.

There are times the answer is very apparent. For instance, in a SaaS organization, software developers are needed as soon as a market is selected and the product specifications are set. Other times, this decision can be much more difficult, while still having a profound impact on the success of your company. One of these “not so apparent” skillset determinations is the CFO and/or controller decision.

Two Very Distinct Roles

Let’s start with the key differences between a CFO and a controller. These job titles are frequently confused and intermingled, but they are very different and distinct roles requiring unique capabilities .

A skilled CFO is strategic and forward looking, taking all aspects of the business into account to guide an organization to financial success and maximum value. A talented controller looks backwards and ensures that recorded financial information is accurate and reported timely, establishing policy and guiding staff to do so.

Essential Differences in Roles

CFO Controller
Strategic: “Where do we want to go and how do we get there?” Tactical: “Where have we been and how do we make sure that understanding is accurate?”
Forward-looking futurist Historian
Broad breadth of knowledge and encompassing business acumen Deep subject area expert in accounting and financial reporting
Prognosticator of future business outcomes Keeper of accurate financial records

Determining What You Need

How do you know when your organization needs a CFO or controller? Consider their differing skill sets, focus and mindset.

CFOs focus on maximizing the value of an organization and developing strategies to reach that maximum value. These strategies go beyond the obvious of capital structure, extending to go-to-market, sales and other strategies that are critical to high valuation (if it isn’t critical to maximizing value, it might not be a strategy). CFOs typically use the tools of corporate finance to understand and improve a business’s economics and chart an economic roadmap to the future.

Controllers ensure that financial records and reporting are accurate and timely. Without good information about the past, as provided by a controller, it’s very difficult for a CFO to plan a future path to maximum value.

Indicators You Need a CFO or Controller

CFO Controller
Need to plan the economics, right up to the exit point, of a company’s future Need complete and accurate financial information
Need to integrate financial and non-financial knowledge into an understanding of the business’s economics Need to establish operating and accounting policies that enable accurate financial information
Need to maximize organization valuation, including at fundraising points and during M&A Need timely financial reporting
Need guidance on investment (internal or external) Need to provide accurate historic financial information for fundraising and M&A

What Are Your Questions?

Another way to better understand the skill sets needed by your organization is to consider the questions that need to be answered.

Is the organization at a point where you need a new go-to-market plan and to understand how that strategy change will impact company value? How do you understand and improve your customer acquisition performance? How do you run to maximize profitability and/or cash flow? How do you measure, rank and rack investment opportunities, both internal and external? What is the financial path to exit for your company? These are questions that an experienced CFO can help answer.

If the questions are more in line with accurate historic information, such as how much free cash flow was generated last quarter or what sales expenditures were in the prior month, a qualified controller can help address them.

Again, the two skill sets are complementary, not exclusive. It will be very hard to accurately predict the impact of a change without accurate historic data. (Note that this does not necessarily mean you need two full-time hires, which can be a challenge in terms of both finding and affording qualified people. In many cases, outsourcing is a good solution, because it enables you to add the specific expertise you need on a part-time basis.)

Types of Questions CFOs and Controllers Can Help Answer

CFO Controller
Given a change in our go-to-market strategy, and considering expected future market conditions, what can we expect our financial performance to be over the next 12 months? What was last quarter’s financial performance?
What is the best investment of our free cash over the next year? Three years? How much free cash flow did we generate last quarter? Last year?
Where should we invest to gain the highest increase in profitable sales? Do we have spending controls in place to reduce financial risk to the business?
Are we investing in the right areas to maximize the value of the organization? Do we have the proper policies in place to produce accurate financial information?

The bottom line? CFOs and controllers bring different skills, focus and mindset to an organization. One does not come before the other, and a solid finance function depends on both to bring value to an organization.

To learn more about how to get the expertise of a controller and/or CFO without investing in an in-house team, contact our experts.

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