These days the same misconceptions around CFO and Controller roles that have lingered for decades appear to be just as sticky as always. Time and again we hear the misconceptions reiterated that “a CFO only handles finance” and a Controller is “really just an accounting CFO.”

So, we’ve created this resource to set the record straight for business leaders that are looking for financial direction and don’t understand which role their small or mid-market company needs or why it really matters one way or the other.

But before we can talk about how a CFO and Controller are different, we need to explain why it matters at all. It’s important to understand that clarifying the distinctions between CFO and Controller roles isn’t just a matter of semantics. CFOs and Controllers are two distinct roles that serve two distinct functions within a business. Both are important and, when executed well, they will complement each other to aid in strategic management and foster growth. Once you understand that these roles are meant to work together, defining each becomes a critical component organizational alignment.

There is no one better positioned to create sustainable financial success inside a business than the CFO. A CFO takes their financial expertise and channels it into a strategic leadership role to create financial success for the company and its stakeholders. As such, their responsibilities include: budgeting and forecasting, managing mergers or acquisitions, and handling compliance issues.

A CFO has a deep understanding of your business model and your banking relationships, works with your board of directors, prepares detailed financial and management reports, works with auditors, oversees tax planning, and sets policies around controls and payroll. The CFO role is forward-thinking as they consider economic, industry, tax, government regulation and social issues. As such, a CFO is especially valuable for a company that is growing quickly, employs a large number of employees, and/or has complex product lines. CFOs also bring tremendous value to a company when it is considering making an acquisition, preparing itself to be acquired, or has its sights set on obtaining funding.

However, knowing what kind of value a financial leader can provide doesn't answer the question, "Do I need a CFO yet?" So, how do you know when it is the right time in the evolution of your business to bring in a CFO?

The list of skills and experience necessary to be a successful nonprofit CFO is long and varied, which can make it seem like a Goldilocks type of situation at first glance. And yet, maybe that isn’t a bad thing! In our line of work, we typically call it something else: balance.

Let’s discuss some of the ways in which this kind of balance is not only helpful for a nonprofit CFO, but critical to their success.

Regardless of size, industry, or location, strong financial leadership is a vital component of any organization’s success. Yet, small and mid-sized companies often forgo hiring a CFO due to budgetary constraints. This is where bringing in a fractional resource can help! An outsourced fractional CFO will perform the same duties as an in-house full-time CFO, but on a more limited time basis.

For those that are not familiar with the term, “fractional leadership” covers anything that is less than full-time. That means a fractional CFO may perform ongoing accounting/finance duties for a set number of hours every week for months or even years while the company grows until it reaches a point where it has enough work to justify the cost of a full-time hire. In this way, a fractional CFO is a great steppingstone as an organization grows or undergoes significant transition. In other situations, a fractional CFO may be brought in to provide short-term business project oversight or to clean up a mess that has resulted from a major accounting issue.

So, let’s look at when a fractional CFO is an absolute must-have.

Today’s executive financial hiring numbers reveal a surprising trend! Recent data shows that the rate of companies hiring externally for their Chief Financial Officer (CFO) role is at a 10-year high. The prevailing theory as to why so many companies are looking outside their organization to hire a CFO is that succession planning for CFOs has been deprioritized in recent years as they have focused on tackling their organizations’ more pressing needs instead. And yet, succession planning remains a critical activity to avoid the disruption and cost associated with needing to look externally for a replacement when an organization’s CFO leaves or retires.

“My finance leader is leaving! Now what do I do?!”

In some sense, it’s tempting to offer the platitude, “a debit is a debit everywhere we go!” (which is a colloquial way to suggest that all accounting is created equal). However, while there’s some truth to that fact that every organization replacing a leader will need to take some core actions, you don’t need to drill down very far to realize that each business has unique elements to consider as well. Those unique facets will add complexity to how you respond to the reality of a financial leader leaving your organization.

The following guide will help your organization evaluate how ready it is for turnover in a finance leadership role, offer suggestions for how you can be better prepared in case your executive finance leader leaves, and provide key insights into what to do next if the loss of your financial leader happens suddenly.

A business valuation is a critical component of securing a company’s future. Whether it’s done as part of a business sale, merger agreement, litigation proceedings, investment negotiation, succession planning, estate planning, or in compliance with financial regulations, a company valuation gives all included parties reliable information about a business’s financial worth and risk level to aid in strategic decision-making.

While the specifics of the business will clearly determine its calculated value at the conclusion of the process, one person is instrumental in helping the company to arrive at that final number. An experienced CFO plays a key role in any business valuation by leveraging their financial expertise to offer strategic insights along the way and ensure an accurate final assessment of the company’s value.

Aesop’s fable about the race between the tortoise and the hare provides a story to show how a race is not always for the swiftest. In the business world, some companies are very focused on short-term financial results while others are managing for the very long-term time horizon. Some companies are working to improve their operations and financial results in order to sell the business in a few years, while others are building a business for the next generation of owners.

When there is a need to hire a new CFO, the question the CEO and the owners should consider asking is: do I need a tortoise or a hare as my next CFO?