Controller vs CFO: What’s the Difference & Which Fits Your Business Needs?

Controller vs CFO: Role Differences & Responsibilities

Does your business need a controller or CFO for its planning, financial reporting, cash management, and decision-making analysis? What’s the difference between controller and  controller? Learn about the roles and responsibilities of the CFO and controller and when to hire them.

Companies may become bogged down by an inefficient day-to-day accounting workload that uses too much time. Consider ways to increase the efficiency of your finance and accounts payable team to make more valuable business contributions. 

Two choices are adding AP automation software to your ERP system and hiring a fractional CFO. The best AP automation software will increase efficiency and financial controls, reduce costs, and free up finance time for results-driving projects.

Controller vs CFO: What’s the Difference?

The key difference between controller vs CFO is that a CFO oversees a company’s financial health from a holistic view, whereas a controller manages the day-to-day financial management tasks. The controller reports to the CFO and the CFO reports to the CEO, and is a member of the executive team.

The CFO has more of a strategic, finance, capital raising, investor relations, and M&A focus, whereas the controller has day-to-day accounting, financial statement preparation, budgeting, financial planning, tax compliance, audit liaison, and financial reporting responsibility. 

Controller and CFO Qualifications

The Controller usually has a CPA (certified public accountant) license and experience with a large CPA firm or a CMA (certified management accountant) certification through the IMA professional organization and industry experience. The CMA exam is a two-part exam covering (1) Financial Planning, Performance, & Analytics and (2) Strategic Financial Management.

The CFO may have an MBA degree and possibly a CPA license or CMA certification. The CFO may have Controller, CPA firm, or Wall Street finance experience. 

As part of their skillset, your company’s Controller and CFO should both understand generally accepted accounting principles (GAAP) and the accounting process to prepare the financial statements. Financial statements include balance sheets, income statements, and cash flow statements, with adequate financial disclosures.

For publicly traded companies complying with Sarbanes Oxley (SOX), CEO and CFO certifications must be provided regarding the accuracy of the financial statements and adequacy of internal controls for enterprise risk management to protect stakeholders.

Controller Roles & Responsibilities

11 roles and responsibilities of a controller are:

1. Managing and hiring staff for the accounting department
2. Having responsibility for all accounting functions and record keeping
3. Approving journal entries
4. Preparing, reviewing, or consolidating multi-entity financial statements and making SEC company report filings 
5. Delegating and reviewing reconciliations and schedules for external audit and serving as coordinator
6. Coordinating the forecasting and budgeting process to control spending
7. Performing or reviewing financial analysis, including actual vs. budget variance analysis, ratios, and decision support using financial data analysis
8. Implementing and improving internal control systems and global regulatory compliance
9. Increasing the efficiency of accounting operations
10. Selecting and implementing the best accounting, ERP and financial automation software systems
11. Coordinating M&A systems integration and recording M&A deals in the financial statements

CFO Roles & Responsibilities

The CFO is the top financial executive in a company. 

11 roles and overall financial team responsibilities of a CFO are:

1. Hiring and managing the financial team
2. Overseeing financial planning and strategic business planning
3. Reviewing financial statements and SEC company filings
4. Improving internal controls and ensuring global regulatory compliance
5. Preparing informative Board of Directors reports
6. Financial analysis and presentations
7. Optimizing cash management by performing cash flow forecasting and cash flow analysis
8. Obtaining financing, including raising VC capital and coordinating IPOs, and handling treasury functions
9. Identifying merger & acquisition deals, M&A valuations, and handling due diligence
10. Managing Investor relations and interacting with equity analysts
11. Strategic finance and business decision-making analysis and initiatives to improve business revenues, operational efficiency, and profitability

The CFO should have a big-picture understanding of the business and accounting, even if they don’t have a specialized accounting background. They should be able to optimize the capital structure, prepare business plans, investor decks and presentations, and obtain financing. 

What’s a Comptroller?

A comptroller is the top manager of accounting, budgeting, and financial reporting functions, usually in a governmental entity or non-profit organization. Sometimes the job title of comptroller is used interchangeably with controller, which is the chief accountant of a business striving to generate profit. 

Does Your Business Need a CFO or Controller?

Growing small businesses need a controller when the company is a startup or young and they can’t afford to hire a CFO in the finance department. But at some point, unless the accounting department is adequately staffed and uses AP automation software to increase efficiency, the controller’s time will be spent on day-to-day activities rather than strategic finance. Then consider whether the company needs a Chief Financial Officer too. 

Before a company hires a CFO in addition to a controller, in a smaller company the controller is also responsible for cash flow management. 

A controller reports to the CFO. The CFO, with top responsibility for all financial functions, reports to the Chief Executive Officer (CEO). A useful Chief Financial Officer performs a strategic finance function and contributes to raising financing, completing M&A deals, and improving business metrics and performance. 

Before your company can afford a full-time in-house Chief Financial Officer, it should obtain rate quotes for pricing and consider hiring a fractional CFO for its needed CFO services. Meanwhile, train your Controller to become a productive CFO later and request that the fractional CFO mentor your current controller and finance team.

When your company can afford to pay a full-time CFO and a controller, consider whether the current controller is promotable to the Chief Financial Officer position. If yes, hire a new controller for day-to-day accounting activities and to support the CFO with useful financial analysis. 

Controller vs CFO FAQs

Some frequently asked questions with answers follow. 

What’s the hierarchy of CFO, controller and bookkeeper?

The Controller reports to the CFO (Chief Financial Officer). A bookkeeper or accounting staff reports to the controller or business owner. In government entities or non-profits, the controller may be called comptroller and may serve as the highest ranking in the department responsible for budgeting and accounting. 

What are the salary differences between CFO and controller?

CFO and controller salaries and other compensation vary by company revenues (size) and private vs. publicly traded status, and candidate qualifications and experience. Bonuses, employee benefits, and equity compensation, including stock options, are extra compensation. 

The CFO earns a much higher salary than a controller. According to Salary.com, the average U.S. CFO base salary is $419 thousand, ranging from $318 thousand to $535 thousand vs. the average U.S. Controller base salary is $239 thousand, ranging from $199 thousand to $284 thousand. 

As an additional CFO pay data source, according to the CFO recruiting firm, Cowen Partners, average U.S. base CFO salary ranges from $150 thousand to $700 thousand, depending on company revenues and private vs. publicly-traded status, as shown in the link.

For more information by geographic area, you can download the annual Salary Guide from recruiting and temporary hiring firm, Robert Half, which includes CFO, Controller, and accountant job salaries by job title and city.  

Should your business have a CFO if you have a controller?

Small businesses usually hire a controller with accounting, budgeting, and financial reporting responsibilities before they hire a CFO because they may not be able to afford a Chief Financial Officer. The controller performs some functions of the CFO like cash management but usually does not have enough staffing and time to also function as a strategic CFO influencing business results. 

Your business should consider using AP automation software integrated with your ERP system to reduce the time to process invoices and make and reconcile global payments. Accounts payable automation speeds the monthly close process for financial reporting. This efficiency lets the controller spend more time on higher-level decision-support tasks using non-financial and financial information.

Your company can consider hiring a part-time independent contractor as a fractional CFO to perform some CFO duties before it hires a full-time CFO.

Tips for Finding a CFO or Controller

8 tips for finding a CFO or controller include:

1. Think about triggers for when you will need a full-time CFO vs controller or fractional CFO.
2. Decide if your growth company will later go public and complete M&A deals.
3. Determine the key attributes, skills, and qualifications of a CFO or controller that you’re seeking, including strategic finance skills for a CFO.
4. Consult your venture capital firm partners and CPA firm regarding qualifications, candidate referrals, and selection. 
5. Write or update a job description for an online search ad or executive search firm.
6. Interview qualified candidates with multiple employees for company culture, critical thinking skills, experience fit, and willingness to work at the office vs. remotely.
7. Check prior employer references for the shortlist to the extent possible.
8. Select the right long-term CFO or controller candidate for your business. 

A real-life example of how a  founder picks a CFO is Tipalti CEO and Co-Founder, Chen Amit’s thought process for selecting and hiring the company’s first CFO for the fast-growing FinTech company. Amit believes that easing pain points is a trigger for hiring for a new position. Amit wanted a smart, strategic, and experienced, non-accountant CFO to identify growth opportunities, to help reach fund-raising metrics, and quantify total customer acquisition costs (CAC). This process resulted in Tipalti hiring Sarah Spoja as its first CFO. 

Conclusion

Knowing when to hire a full-time CFO, fractional CFO, and controller is essential for growing your business. Strategic finance to drive business value, business forecasting and planning, financial fund-raising, and M&A are important skills for the CFO. Comptrollers serve government entities as the highest financial executive and some nonprofit organizations. 

To give your CFO and controller the right tools to add value to your company, consider the benefits of AP automation software that integrates with your ERP system or accounting software. Read our eBook on CFOs guide to payables automation.