Who Is A CFO And A Controller? The Differences Between The Two?

A CFO and a Controller are the two crucial players who ensure the finances are intact in an organization. They play an integral role to ensure the financial department of the company is operating smoothly. They help with creating financial strategies and implementing substantial policies. They make sure to abide by the government protocols and regulations. The profits of the company are planned and driven towards by these two players. 

The roles of a CFO and a controller may overlap, and you may find both of them with similar responsibilities. It can bemuse you. We will summarize the roles of a CFO and a controller and help you with a clear understanding. By the end of the blog, you should be able to decide if you need a controller or a CFO for your company. 

Who is a CFO?

A CFO is a Chief Financial Officer. CFO belongs to the senior executive team that controls and handles the financial department of the company. 

A CFO’s rank is similar to other executive positions like a chief operating officer (COO), chief information officer (CIO), and chief marketing officer (CMO). 

The CFO leads the financial team meetings. The duties include monitoring the cash flow, financial planning and budgeting, projecting, analyzing the company’s financial strengths and weaknesses, suggesting corrective and disciplinary measures, and finally creating future-proof strategies. 

A CFO is accountable for three main divisions – controller, treasurer, and tax manager. These team managers report to the CFO. Whenever a company needs to decide or make changes to the accounting, projections, cash flow predictions, and wants to condense financial strategies, the CFO will be the go-to person. 

Who is a Controller?

A controller is a company executive that is accountable for managing the daily accounting activities, approving transactions, processing payrolls, and creating financial reports in the organization. 

A controller, often, serves as an auxiliary power source to CFO for preparing operational budgets. The controller, besides the tax manager and treasurer, directly reports to the company’s CFO.  

The controller oversees four divisions in the company. They are accounting manager, financial planning manager, accounts receivable manager, and accounts payable manager. 

Now, let us break it down into specific actions on the everyday roles and situations and who you need exactly for your business. 

When does your company need a CFO?

• Administer the finance department. CFO is required to administer and guide the finance department towards completion of daily tasks, monitor daily team’s performance, provide better solutions for setbacks, and manage cash shortfalls. 
• Advance interpretation and reporting. CFOs are financially quick-witted and can picture an uncanny story behind the numbers and reports. From interpreting those numbers to preparing reports that will be beneficial for the organization – for the present and the future – CFOs are the masterminds. The reports and forecasts will help the other executives determine the actions needed to be taken to drive a positive business impact.
• Financial strategy and direction. Pricing decisions, analyzing market trends, budgeting, prospective projections, strategy creation, refinement, etc., are a few of the crucial tasks that require a CFO’s intervention. The CFO’s financial strategy and direction is the starting point for the other executives to decide anything for their department.
• Stakeholder report creation and interaction. It is the duty of the CFO to prepare insightful and reliable data packages that help stakeholders make investment decisions in the company. A productive and profitable board meeting revolves around the CFO’s reports and communication.
• Fundraising support. Besides the CEO, the CFO joins hands to raise funds amongst the C-level executives. The CFO also supports debt activities and equity programs.

When does your company need a Controller?

• Oversee an accountant and a bookkeeper. A controller oversees accountants and bookkeepers in the absence of a CFO in the company. 
• Provide accurate financial reports. Bookkeepers often struggle to identify the origins of incorrect numbers in their daily financing or struggle to find a solution, and that’s where a controller comes to their rescue.
• Prepare the period close process and report delivery. It is usual for bookkeepers to defer the financial close process. A controller supervises and ensures the period close process is done on time, and the reports are available to benefit from the real-time data for making any decision.
• Check fraud, errors, and security breaches. A bookkeeper or an accountant does not possess the skills required to administer any security breaches and attacks.
• Power source for CPA. Bookkeepers’ skills do not expand to help a CPA with enough assistance during tax seasons or an audit. 
• End-to-end ownership of the accounting process. As the business expands, the complications of accounting processes expand with it. Controllers possess the skills and experience to own the process and make necessary changes wherever required to balance the accounts. 

CFO vs Controller in a nutshell:

Who is a CFO and a Controller?

• CFO: CFO is a Chief Financial Officer. A CFO controls and handles everything related to finance in an organization and drives the team meeting.
• Controller: The controller oversees everyday financial operations in the organization and ensures it is seamless.

Hierarchy

• CFO: CFO ranks exactly below the CEO. The rank is similar to other executive positions like a chief operating officer (COO), chief information officer (CIO), and chief marketing officer (CMO).
• Controller: The controller, along with the treasurer and tax manager, reports to the CFO. 

Divisions

• CFO: There are three divisions that a CFO oversees. They are the controller, treasurer, and tax manager. 
• Controller: There are four sub-divisions under the controller’s arena. They are the accounting manager, accounts receivable manager, accounts payable manager, and financial planning manager. 

Responsibilities

• CFO: In addition to managing and guiding the controller, the prime responsibilities of the CFO include future-proof budgeting, projections, planning, build financial strategies, and optimize the financial department inclined towards achieving the business revenue goals. 
• Controller: The daily functions of the controller include 
  • approving the everyday transactions in the company
  • create daily and monthly financial reports for the daily transactions
  • monitor accounts payable and accounts receivables

If you are stuck in between and see the need for a CFO and a controller, Velan has the third option for you: Outsourcing!

Outsourcing is the best strategy to opt for when a company falls short of resources, time, money, planning, and execution. Velan can help you fill the gap. We have expert and coveted professionals and consultants that can assist you to make the most of your present and future finances. 

With Velan, your business will 

• get access to experts without having to hire an in-house expert
• save on administration and operational costs
• pay only for the work 
• benefit from the flexibility to scale your business’s finances based on the current situation
• be confident about your company’s finances

By and large, Velan will help you optimize your organization’s financial future just like how we optimize ours.