I am consistently surprised at how many business owners I meet that do not understand the difference between the roles of the Chief Financial Officer and the Controller. Not understanding or appreciating the differences between the two roles usually means the business owner has underestimated the value that a CFO brings to an organization. Actually, the confusion between the two roles is understandable. Both come from the same background – accounting – and have an orientation around financial numbers. Often, that’s where the similarity ends.
I like to point out two primary differences. A CFO wears many organizational hats and is “forward-looking.” A Controller, on the other hand, typically wears one hat and is “backward-looking,” so to speak. By “looking back” I mean that Controllers are concerned with business performance data and in maintaining the books and records that report this data. It can be said that he or she is the chief accountant, looking after accounts.
The CFO, meanwhile, has considerable knowledge on accounting, financial reporting, payroll, taxes, business operations, forecasting, funding and capital structures, and the interrelated financial systems supporting the business. Perhaps most importantly, this person must understand the business risks on the horizon and help steer the organization away from the potential “icebergs.”
Clearly, the role of the Controller is important to any business. Reports generated by the Controller help the CFO produce working capital and cash flow models. Financial oversight and management, which are core to a CFO’s job responsibilities, enable the management team to make go-forward decisions to grow the business and effectively manage risk.
A Controller could be viewed as a natural career progression from an accountant. A CFO, though, is not a natural evolution from the Controller position. In other words, Controllers who put in “X” number of years in this role should not automatically be considered as CFO material. As mentioned above, the right person in the CFO role should have broader experiences and core competencies that go above and beyond the “bean counter” skills.
In short, Controllers “count value” while CFOs help “create value.”
Clearly, both the CFO and Controller functions are essential to a sustainable, growing business. However, emerging or middle-market organizations often cannot afford a full-time CFO. This is why companies are turning to external resources like B2B CFO® for guidance and support.
If I can be of assistance to you and your business, please do not hesitate to contact me about our CFO and Exit Planning Services!