What is a Financial Controller?

There comes a time in every business when you need to become more involved in financial management. When that time comes, it could be time to hire a financial controller. 

A financial controller is a senior-level manager who oversees a business’ day-to-day financial operations. An all-rounder that oversees the accuracy of your books and even develops financial strategy.

In this article, we discuss their roles, duties, and responsibilities, including their differences from a CFO.

What do they do?

To put it simply, a financial controller is the lead accountant. They often work in collaboration with CFOs, ensuring the accuracy of the books and helping create accounting plans. Their role includes overseeing record-keeping and improving cash flow. As the company grows the demands for a controller also increase to cover management of information technologies, insurance, sales tax reporting, federal income tax reporting, external CPA audits, and human resources. It’s their job to make sure the company is compliant. 

The expansion of a business also means an increase in financial data. The more historical financial data available, the more you need a controller to handle them.

What are their roles and responsibilities?

They are the accounting oversight, making sure all accounting processes are properly handled. In small businesses, the financial controller performs cash flow management, oversees accounts payable and receivable, disbursing cash payroll and managing bank statements. Of course, all these processes are intertwined and it would be negligent of the company owner to assign all of the tasks to one person without checks and balances. In organizing cash distributions, the controller should not be a signatory and another officer, the CEO or CFO, should sign the checks.

A controller is also in control of starting and implementing internal controls over the establishment’s accounting and financial actions. In small businesses, the controller will take charge of the collection of invoices.

A secondary set of responsibilities include helping with establishing budgets, tax reporting, overseeing company insurance, managing information technology, making internal control policies, and even advising on market trends. In small businesses, a controller’s role is more diverse.

Controller vs. CFO

Smaller businesses will probably have both of these functions in one person. But it does not mean there are no distinctions. In fact, it helps to know them to fine-tune your financial organization.

From the layman’s point of view, there are no deviations. However, from observing the daily responsibilities of both, you will see their differences.

A financial controller is an accounting expert; whose expertise weighs heavily on the accounting side. A controller needs to be an accounting expert who is able to spot a tax or balance issue in the books in order to be effective. They are responsible for financial reporting, information management, and record-keeping.

On the other hand, a CFO is a financial expert whose expertise falls in finance, banking, and investor relations. They are not necessarily from an accounting background; CFOs could come from consulting or entrepreneurial backgrounds.  They are in charge of positioning the company for the future using financial strategies and creating forecasts and estimates.

The controller is responsible for overseeing daily financial decisions while the CFO is the strategic thinker of the bigger picture going beyond the accounting department. 

Why is it important to designate one?

The controller is the critical link between the finance department and the rest of the company. You need a good communicator who is an expert in accounting and at the same time, enable non-finance departments to understand why certain decisions should be made one way than the other.