Controller vs CFO: roles, responsibilities, & profiles

The precise differences between certain finance roles can be nuanced and hard to follow. CFO vs VP of Finance, and even Finance Director, can take some unpacking.

Thankfully, financial controllers and Chief Financial Officers are quite distinct. And as we’ll explore, it’s relatively easy to see what sets these two positions apart.

Let’s take a closer look.

CFO vs controller: key differences

The easiest way to think of the differences between the roles of the chief financial officer (CFO) and the financial controller is that the CFO takes the aerial view from above the forest, and the controller is navigating through the trees from one point to the next.

But there are plenty of ways to differentiate between the two roles, so let’s address them one by one.

Finance team hierarchy

The most obvious difference between these two positions is the positions themselves - their place within the hierarchy. The CFO is ultimately the head of the finance department. They’re the financial controller’s boss, as well as the accountants’, financial analysts, and often also the HR and Operations departments.

The Financial Controller is more commonly thought of as the chief accountant. They’re directly responsible for closing the books on time, keeping clean financial records, and usually managing company cash flow.

Skills required

The skill sets required for a controller vs. CFO are mutually supportive but distinct. Ideally, if both roles are present in a company, they’ll work together to complement and support one another as they move the company forward.

The strategic CFO

CFOs create the strategic vision that directs the growth of a business. They set the tone for the financial team and help to shape the culture of the department. They’re always scanning the horizon to identify potential threats and opportunities in order to develop their recommendations and action plans for the future.

Many CFOs will also be trained and experienced accountants. They may also have a Certified Management Accountant (CMA) certification along with their Certified in Strategy and Competitive Analysis (CSCA) certificate.

But generally speaking, CFOs need a broader understanding of the world of finance than is required for the position of controller. While there is no specific certification associated with the role, they often have a background in investment banking or business management. They’re far more focused on financial planning, investing, and capital markets than the day-to-day accounting tasks needed to make their company run smoothly.

The tactical Controller

Controllers spend most of their time in the trenches making sure ledgers are accurate and systems are working properly. While they’re responsible for some managerial duties on the accounting team, their scope of work is more limited than a CFO’s.

Controllers are accounting experts and should maintain adherence to the most recent Generally Accepted Accounting Principles (GAAP) and all relevant taxation regulations. This is a technical position that requires vigilance, attention to detail, and precision.

It’s common for controllers to be a Certified Public Accountant (CPA) or have a similar credential. The CPA certification equips controllers with the know-how on financial planning, internal auditing, financial statements, and more. Holding a CPA is not a requirement of the job, but can help.

Internal controls are developed, monitored, and implemented by financial controllers in order to mitigate the occurrence of accounting errors, irregularities, and fraud. They also generate reports that prove the efficacy of these controls which are used by the CFO to aid in forecasting and planning.

Roles and responsibilities

Both controllers and startup CFOs have experience in the world of finance and/or accounting, and have a strong impact on their company’s bottom line. Smaller companies may even have one position that blends the two positions together.

But at some point, growth will require a clear delineation between the two.

Controller roles and responsibilities

At their core, financial controllers are accounting experts. They have the responsibility of producing financial statements that guide the movement of the company forward. At a macro level, a controller’s responsibilities includes being a contributor to the strategic plan for growth, an implementer of strategy, an operator who maintains internal efficiency, and a steward of the business's assets.

Some of the financial controller's key tasks include:

• Approving invoices

• Developing and overseeing company-wide financial policy and controls

• External financial reporting such as GAAP financial statements, tax statements, and filings with the SEC

• Internal financial analysis and reporting

• Managing the accounting department

• Managing accounts payable

• Managing accounts receivable

• Managing external audits

• Maintaining financial accounts

• Managing legal compliance related to finance and tax regulations

• Overseeing collections and debt management

• Payroll processing

If a business has both finance roles, the controller will typically consult with the CFO to help ensure that various initiatives are compliant with tax regulations and accounting standards.

CFO roles and responsibilities

The CFO role is more comprehensive and includes capital structure and portfolio management. At a macro level, CFOs are responsible for liquidity, forecasting, ROI, and reporting.

Some specific CFO tasks include:

• Advising the board of directors, CEO, or executive team on operational and financial matters

• Being the face of the company for financial matters

• Developing strategies for a variety of scenarios

• Devising a plan for revenue growth

• Initiating and maintaining automation and other finance technology

• Leading the finance department

• Managing debt and equity agreements, investments, and other treasury activities

• Managing finance directors and the controller

• Overseeing cybersecurity, risk management, insurance, and various types of fraud mitigation

• Restructuring management to reduce inefficiencies and increase incremental growth

There are always additional roles and responsibilities that are industry-specific. The list above should give you a good understanding of what the roles and responsibilities are at large.

When to hire a CFO vs. controller?

The best way to identify whether you need a CFO vs. a controller is to take into consideration what the roles and responsibilities are of each individual and how they are currently being met or not being met at your company.

Two signs you need a CFO

You don’t want to wait until your business is facing a financial challenge to hire a CFO. However, whether you need to fill the role with a full-time position or with a contracted position will depend on the specific situation.

Two scenarios that indicate a clear need for a CFO either on a full-time or part-time basis include the following.

Planning and budgeting for growth

Companies that want to pursue a growth strategy will need the expertise of a CFO to generate insight into profit and loss (P&L), evaluate acquisition opportunities, and to create processes for financial planning and budgeting. As opposed to controllers, CFOs provide higher-level financial planning and strategies than controllers do.

Data-driven reporting

If your company is not already using data to drive decision making, it has an opportunity to be leveraged. Data-driven reporting is helpful for strategic logistical purposes, like when a company is faced with an unexpected supply chain problem or economic downturn.

As noted by Deloitte, CFOs can own analytics: they examine the gap between strategy and operational decision making with analytics. The Deloitte article also noted that CFOs define the analytics advantage and deliver operational value with analytics.

Two signs you need a financial controller

Companies tend to need a financial controller when they spend more time on accounting and can't focus on growth. This can also happen when the accountant or CFO is too thinly stretched to offer the necessary business support.

Two common indicators that it’s time to hire a financial controller include growth and GAAP compliance.

Significant revenue growth

Growth is usually a good thing. But it can complicate things for finance teams. More transaction volume, and different kinds of transactions, requires more oversight.

Up to a certain point you can likely get away with purely outsourced accountants. But when those transactions become overwhelming, it's time to add a full-time expert to the team.

A need for GAAP compliance

Once a company needs to generate GAAP-compliant (generally accepted accounting principles) financial statements for bankers, venture capitalists, or investors, you need a financial controller - regardless of revenue or the capabilities and capacity of the accounting team.

Select finance professionals are trained in GAAP fundamentals and may hold a GAAP certification. AICPA’s certification on GAAP for example equips finance professionals with the skills to master GAAP accounting and financial reporting concepts.

In short: companies that are publicly traded are required to follow GAAP compliance. Other types of business choose to follow GAAP because it’s what potential buyers, investors, and lenders look for.

GAAP is important and is not something that should be left to someone who is not well-versed in the subject.

Closing remarks

You may agree that it’s easy to see how one person could fill both roles simultaneously, at least when your company is still new. With so much overlap in the roles and responsibilities, the difference between a CFO vs controller seems negligible at first.

But as the business grows, the need for both quickly becomes apparent.

If you need a point person for financial strategy and a face for fundraising or investment, a CFO is an invaluable investment. Equally important, and perhaps more important initially, is a controller who can ensure accurate financial reporting that becomes the foundation for future strategy and growth.