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.

The Differences between CFOs and Controllers

Our CEO, Kevin Briscoe, summarizes the difference between a CFO and a Controller in this way:

A CFO is walls-out and forward-facing and Controller is walls-in and rear-facing.

Put another way, CFOs deal with forward-looking financial information and are more strategic in nature, while Controllers work with historical accounting information and are more tactical in nature.

This explanation aptly covers the high-level strategic and operational differences between the two roles, but what does that difference look like in their day-to-day functions and responsibilities?

CFOs

A CFO at a small to lower middle market business will support lower-level finance and accounting staff as well as oversee all accounting/finance-related activities related to the company’s strategic direction such as:

• Cash flow management
• Financial reports
• Business modeling
• Financial planning and analysis (FP&A)
• Financing

Furthermore, CFOs will add value to business by lending their knowledge and expertise to other internal departments (such as IT and HR) to assist with areas like:

• Technology and tools
• Hiring and training
• Employee programs and benefits

The CFO will also liaise with stakeholders such as the CEO, investors, funding institutions, the board of directors, and auditors on these topics.

> How Does a CFO Increase the Long-Term Value of a Company? <

Controllers

A Controller at a similar small to mid-market business will support lower-level accounting staff and oversee accounting-specific activities like:

• Financial reports
• Budgeting
• Financial close
• Accounting policies and processes
• Internal controls
• Financial compliance
• Audits

Across these areas Controllers will add value by looking for ways to improve accuracy, efficiency, and scalability of the company’s accounting operations to support its strategic growth initiatives.

> What Do You Need in Your Next Controller? <

Now that you know how they differ, it’s time to decide which one you need!

Do You Need a CFO or Controller?

While companies of any size can benefit from having both roles, smaller companies typically start with a Controller and then add a CFO somewhere above the $1MM mark. This does not mean that companies should switch from having a Controller to having a CFO because the roles are really meant to work together – this is just the threshold where hiring a CFO begins to make sense. However, this CFO role may not be full-time to start.

Using a fractional CFO (otherwise known as a “part-time CFO” or “outsourced CFO”) is a great way for small to lower middle market businesses to get the financial leadership they need without incurring the expense that comes with hiring a full-time CFO internally. This is a significant item of note because the median base salary for a CFO nationally is currently $150K/year with a total pay package range that extends up to $285K/year, which means that a company must be able to justify this kind of significant expense before hiring a full-time CFO role.

A fractional resource provides a steppingstone as the company is growing to help facilitate that growth in a way that doesn’t tie up too much cash in unnecessary salary costs. The main benefit of using a fractional CFO is that it turns a fixed cost into a variable cost by allowing the company to scale the role up or scale down based on their changing needs. The result is a flexible solution that offers everything a company needs and nothing it doesn’t!

When you need an outsourced CFO or Controller, we can help! We offer fractional financial executives to provide exactly what you need when you need it! Whether you need a part-time CFO or a part-time Controller role, our team of highly experienced financial leaders will work on your terms to create a truly customized solution that provides the same caliber of financial expertise that you would find at large organizations. The result is an executive that will be the right fit for the needs of your company and the demands of your role. Learn more today by reaching out to start a conversation!