What Do Controllers Do?
As a business owner, there’s a good chance you wonder if your accounting and bookkeeping are correct. You might also ask yourself if your bank reconciliations are up to date or whether your balance sheet is an accurate reflection of the state of your business. In addition, you may have an occasional fear that someone is stealing from the business you worked so hard to build.
With a controller by your side, you can answer all of these questions, ease your concerns, and gain some much needed peace of mind. So what is a controller and what do they do? Keep reading to find out so you can determine whether this type of professional makes sense for your unique organization.
Roles and Responsibilities of a Controller
Put simply, a controller oversees the accounting functions of a business. They're managerial level professionals who design and supervise the processes for recording a company’s finances. Plus, they confirm that all data is accurate, on an accrual basis, and submitted in a timely, efficient manner. While the roles and responsibilities of a controller vary, they typically involve:
- Leadership: Controllers focus on mentoring and managing accounting, bookkeeping, and financial teams.
- Cash Flow Management: Cash flow management is monitoring and balancing cash flows in and out of a business to ensure all obligations are met and investments are optimized.
- Audit Support: Controllers often work with external financial and tax auditors to provide them with the various types of documentation and information they need.
- Internal Controls: This refers to creating and monitoring company policies and internal controls, such as spending controls to protect assets and reduce the risk of fraud.
- Budgeting: Budgeting involves creating a budget from scratch using historical data or making sure the current budget is being followed.
- Debt Management: Debt management often involves administering loan agreements and ensuring bank compliance.
- Compliance: Controllers help ensure compliance with federal and local laws, provisions, and financial regulations.
- Financial Strategy: Financial strategy allows controllers to create a clear roadmap for what a business is attempting to achieve financially.
- Reporting and Analysis: Through the reports that controllers develop and analyze, businesses are able to make informed decisions that steer them toward success.
- External Reporting: External reporting refers to preparing financial and tax statements, including public filings with the Securities and Exchange Commission (SEC).
- Cost Savings: Controllers look for opportunities that allow businesses to save money and make the most out of their resources.
- Communication: Managers, owners, founders, investors, and other key stakeholders meet with controllers regularly to review finances.
Does My Business Need a Controller?
Now that you know what a controller does, you may wonder if you need one. A controller might make sense if:
- Your Business is Growing: If your business has expanded and your accountants and bookkeepers can no longer meet your needs, a controller is your best bet. This professional can help your growing company with complex transactions, enforce internal controls, and reduce errors and inefficiencies that can cost you time and money.
- You Need to Meet GAAP Compliance: No matter your revenue size, a controller may be necessary to create financial statements that comply with GAAP. They can help you adhere to the requirements of investors, bankers, or venture capitalists.
- Your CFO Has Too Much On Their Plate: It’s all too easy for a CFO to become overwhelmed. If you know your CFO is having a difficult time managing the accounting team while leading financial strategy, it may be time for a controller to take the load off them. A controller can take over supervising the accounting team and support the CFO’s forecasting and decision making efforts.
- Your Business Earns More Than $5 Million: As a general rule of thumb, organizations with more than $5 million in revenue can benefit from the expertise of a controller. If your revenue is less than $5 million, a controller may still come in handy, depending on your circumstances.
Difference Between a Controller and a CFO
While the terms controller and CFO sometimes get used interchangeably, there are noteworthy differences between these two professionals. In general, a CFO works with external parties while controllers do more work behind the scenes. CFOs help key stakeholders make important financial decisions.
Controllers are responsible for the day-to-day management of accounting teams while ensuring accuracy and compliance. A day in the life of a CFO may consist of determining the best ways for a business to invest money, reviewing and comparing past and future finances, overseeing capital structure, and predicting future scenarios while analyzing the right direction for a company to succeed.
A controller, on the other hand, might spend their day supervising accounting operations, preparing timely and accurate reports, providing information to external auditors, and recommending ways to improve financial performance.
Reason to Outsource a Controller
If you’re a medium business, you might not be in a financial position to hire a full-time, in-house controller. The good news is you can outsource one. By doing so, you’ll only pay for the work you need, save money, and maximize your ROI. In most cases, you can scale up and down to meet the ebbs and flows of your business.
You might also want to outsource a controller if you’d like to supplement your existing financial team. A controller can come in and streamline processes while reducing inefficiencies and errors. Also, if you have an outsourced CFO, you can invest in an outsourced controller who may work with them to meet all of your needs. In addition, if you have a complex transaction, like a merger or acquisition coming up or would like to raise capital, outsourcing a controller is likely the way to go.
Key Takeaways
- Core Function: Controllers oversee day-to-day accounting operations, ensuring data accuracy and GAAP compliance.
- Strategic Value: They bridge the gap between bookkeepers and CFOs by managing cash flow, internal controls, and financial reporting.
- Hiring Milestones: Businesses typically benefit from a controller when revenue exceeds $5 million or during periods of rapid scaling.
- CFO vs. Controller: While a CFO focuses on external strategy and fundraising, a controller focuses on internal processes and financial integrity.
- Outsourcing: Outsourced controllers offer a cost-effective way for medium-sized businesses to access executive-level oversight without a full-time salary.
Frequently Asked Questions
What does a controller do for a business?
A controller oversees a company’s accounting operations, ensuring financial accuracy, compliance, and efficiency. Their responsibilities include managing accounting teams, overseeing reporting and analysis, monitoring cash flow, supporting audits, creating budgets, and implementing internal controls.
When should a company hire a controller?
A company should consider hiring a controller when it experiences rapid growth, needs GAAP-compliant financial reporting, has complex financial operations, or when the CFO is stretched too thin. Many businesses benefit from a controller once revenue approaches or exceeds $5 million.
What is the difference between a controller and a CFO?
A CFO focuses on high-level financial strategy, forecasting, fundraising, and investor relationships, while a controller manages day-to-day accounting operations, compliance, reporting, and internal controls. The controller ensures financial accuracy, while the CFO drives long-term financial strategy.
What are the benefits of outsourcing a controller?
Outsourcing a controller provides access to experienced financial leadership, reduces overhead costs, improves financial reporting accuracy, strengthens internal controls, and allows flexibility as business needs change.
How does a controller help improve cash flow?
Controllers monitor cash inflows and outflows, forecast cash needs, optimize working capital, and implement controls to ensure timely collections and payments, helping businesses maintain healthy cash flow.
Can a controller help with audits and compliance?
Yes. Controllers prepare financial documentation, coordinate with auditors, ensure GAAP compliance, and maintain internal controls that reduce risk and support successful audits.
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