There are many financial leadership roles in a business but Chief Financial Officer and Controller are two of the most important.
While some small companies combine the roles, larger businesses require both. Each has distinct functions that are important to short and long-term health of the business so no matter your company’s size, it’s good to understand each position.
Chief Financial Officer
A CFO is a member of senior management and is responsible for managing the finances and financial risks of the company. All accounting functions report to the CFO, but the CFO himself/herself is a strategist focused on the big picture.
A CFO has to be a forward thinking individual with a strong understanding of the operations of the business. For this reason, in many larger organizations Operations, Investor Relations, Real Estate, Mergers & Acquisitions and Human Resources report to the CFO.
A controller has responsibility for all accounting-related activities within a firm. He/she reports to the CFO and is charged with maintaining the books and records of the business by looking back at data already generated.
The controller supervises the accounting department and helps management interpret and utilize accounting information.
Two Different Views
The focus of a CFO is on financial oversight and management. Analysis of the reports provided by the controller enable the CFO to generate working capital and forecast information.
The controller deals with the day-to-day monetary operations – the accounting – whereas the CFO focuses on the larger picture – the finance.
The CFO often serves as a strategic partner for the CEO, whereas the controller manages the accounting staff and daily tactical accounting matters.
Controllers manage toward improved efficiencies and financial risk avoidance. CFOs strategically lead for successful growth.
Both positions are equally important when a business begins to grow.
|Strategic partner to senior management, especially the CEO||Manages the day to day accounting operations|
|Provides financial strategy||Provides analysis of past performance|
|Forecasts the future: concerned with business growth||Focuses on books and records: concerned with current and past performance|
|Provides financial oversight||Responsible for efficiencies, reporting, and standards|
|Reports to the CEO or President||Reports to the CFO|
CFO or controller or both: What’s right for your business?
Companies with revenues under $50 million generally will have a controller or a CFO, but not both. This allows for financial reporting, tax compliance, and a level of financial strategy required for a business of that size.
Companies over $50 million generally have both positions. This allows for the strategic business planning along with the tactical financial management.
If you have questions about your company’s financial organization or if you are looking to outsource either the CFO or Controller roles, contact Sousa & Weber for sound advice. We have the knowledge and experience to help your business thrive.
Rich Weber is a CPA and founding partner of Sousa & Weber, LLP, a full-service accountancy firm located in Los Angeles, CA.