The short answer is that the controller manages day-to-day finances and reporting, while the CFO focuses on strategic planning and long-term financial health.
In this article, we’ll break down the key differences and responsibilities, and how each role can impact your business growth.
This guide is also related to our articles on CFO reports for small businesses, accountant vs CPA: what’s the difference and what is a virtual CFO?
This list includes:
- Controller responsibilities
- CFO duties
- Differences between controller and CFO
- When to hire a controller or CFO
- Importance of financial leadership
Let’s dive in!
What is a controller and what do they do?
A controller is primarily responsible for overseeing all accounting and making sure that the company’s financial reporting is accurate and timely. Controllers often act as the backbone of the financial department, making sure that everything runs smoothly and that the company adheres to regulations.
Key responsibilities of the controller
The controller’s responsibilities can be pretty extensive, but they typically revolve around a few core areas: accounting, financial reporting, and compliance.
Accounting is the day-to-day task of recording all financial transactions. This means tracking sales, expenses, and any other financial activities. The controller oversees this process to make sure everything is accurate and up to date, and that the company’s financial records reflect its actual performance.
Financial reporting is another major responsibility. The controller prepares financial statements, which provide an overview of the company’s financial status. These reports include the balance sheet, income statement, and cash flow statement. The controller must make sure that these documents comply with accounting standards and regulations.
Compliance is making sure the business follows all financial regulations and laws. This can include tax regulations, accounting standards, and other financial reporting requirements. The controller stays up to date with any changes in the law and makes sure the business adjusts its practices accordingly.
The controller also manages various day-to-day tasks that keep a company’s financial operations running smoothly: managing budgets, working with different departments to create and monitor them, and making sure that spending aligns with the company’s goals are some important ones. The controller regularly reviews budget performance, identifying any variances and making adjustments as needed.
Another responsibility is overseeing accounts payable and receivable, with invoices processed accurately and on time, so that vendors are paid promptly. The controller also monitors incoming payments, making sure customers pay their invoices on schedule.
The controller also establishes and maintains internal controls, creating processes and procedures that protect the company’s assets and verifying the accuracy of financial reporting, regularly reviewing and updating them as necessary. They often collaborate with other departments and work closely with the finance team, providing guidance and support as needed.
During financial audits or reviews, the controller often works closely with external auditors, providing them with the necessary documentation and explanations.
What is a CFO and what do they do?
The Chief Financial Officer (CFO) focuses on the overall financial strategy and health of the organization. This role means looking at the bigger picture and making decisions that impact the company’s future. The CFO partners with other executives to guide the organization towards its financial goals.
Key responsibilities of the CFO
The responsibilities of a CFO are diverse and often strategic in nature, but typically revolve around financial planning, investments, and driving business growth.
1) Financial planning is one of the core duties of a CFO, creating long-term financial forecasts and budgets that align with the company’s goals. The CFO analyzes current financial data and market trends to help shape these plans.
2) Investments are another area of focus. The CFO assesses potential investment opportunities, deciding where the company’s capital can be best used. This might include evaluating new projects, partnerships, or technology investments.
3) Business growth is often at the forefront of a CFO’s responsibilities–identifying ways to expand revenue streams and improve profitability. The CFO works closely with other departments to align financial strategies with operational goals.
Managing investor relations, raising capital, and mergers/acquisitions
Another part of the CFO’s role is managing investor relations, communicating the company’s financial performance and strategy to current and potential investors. The CFO might prepare presentations and reports that highlight the company’s strengths and growth potential, building strong relationships with investors that can in turn lead to greater trust and support for the business.
Whether through debt, equity, or other financing options, the CFO must raise the capital necessary for operations and growth. They’ll need a solid understanding of financial markets and the ability to negotiate favorable terms. The CFO must assess the company’s financial needs and determine the best approach to raise capital effectively.
Mergers and acquisitions are also part of a CFO’s role. When the company considers acquiring another business or merging, they conduct thorough financial analyses to assess the viability of the deal, evaluating the financial health of potential partners and identifying risks. The CFO plays a central role in negotiating terms and makes certain the transaction aligns with the company’s long-term strategy.
Shaping the company’s long-term financial strategy is part of the CFO’s responsibilities, after all. They develop plans that extend beyond immediate financial needs and focus on sustainable growth. The CFO assesses industry trends, competitive landscapes, and economic conditions to make informed decisions.
Key differences in responsibilities
Knowing the differences in responsibilities between the controller and the CFO will help clarify their roles within your business. While both positions focus on finances, they do so in different ways. The controller has a tactical, operational focus, while the CFO takes a more strategic outlook.
Tactical vs. strategic focus: controller’s operational role vs. CFO’s strategic outlook
Controller: Plays a hands-on role in daily financial operations. Their main focus is on the accuracy of financial reporting, managing budgets, and making sure the company is in compliance with regulations. This means they are deeply involved in the nitty-gritty of the financial processes, overseeing accounting tasks and checking that all transactions are properly recorded. The controller regularly reviews financial statements and monitors cash flow to catch any discrepancies before they become bigger issues.
CFO: Operates at a higher level, concentrating on long-term strategy. While the controller manages current financial operations, the CFO looks ahead to set the company’s financial direction. They analyze market trends, forecast future revenues, and identify growth opportunities. The CFO works closely with other executives to align financial strategies with overall business goals, so the company can both survive and thrive.
Accuracy and compliance vs. business growth and future planning
The controller’s primary emphasis is on accuracy and compliance. They produce precise financial reports that adhere to accounting standards and regulatory requirements. Their work involves rigorous checks and balances, making sure that every detail is correct.
In contrast, the CFO’s attention is geared toward business growth and future planning. The CFO analyzes financial data both for reporting and to inform strategic decisions that impact the company’s future. This could include exploring new markets, assessing potential mergers or acquisitions, or planning for capital investments. The CFO must think critically about how to use financial resources to support growth.
While both roles involve financial oversight, the controller’s job is to make sure that the company’s financial house is in order on a day-to-day basis. They handle immediate concerns, such as cash flow management, accounts payable and receivable, and that all financial practices comply with laws and regulations.
Conversely, the CFO is focused on positioning the company for long-term success. They consider the bigger picture, evaluating how current financial practices can impact future growth. This could mean developing new financial models or exploring innovative funding options to support expansion efforts.
In short, while the controller is focused on the operational aspects of finance—accuracy, compliance, and managing daily tasks—the CFO is concentrated on strategic initiatives that drive business growth. This distinction is important: each position complements the other, creating a balanced approach to financial management that addresses both current operations and future opportunities.
Skills and qualifications comparison
A typical controller is usually a CPA. They’ve passed rigorous exams and met specific educational and experience requirements. A CPA has both accounting knowledge and expertise, making them well-equipped to manage the day-to-day financial operations of a business. In addition to a CPA, a controller often has a strong background in financial reporting, audit processes, and tax compliance. They typically have a bachelor’s degree in accounting or finance, and many also hold a master’s degree in business administration (MBA) or a related field.
A CFO often holds an MBA or other advanced degree, and combines accounting knowledge with skills in areas like financial planning, capital markets, and risk management. They typically have extensive leadership experience, and have worked in senior financial roles before taking on the CFO position. They should have a proven track record of driving business growth and making strategic decisions, and experience in managing teams and collaborating with other departments.
Differences in soft skills: attention to detail vs. communication and leadership skills
While technical skills are important for both roles, soft skills are often what differentiates a controller from a CFO.
A controller’s strength lies in their attention to detail. They should be meticulous, as every financial entry must be both accurate and compliant with regulations.
In contrast, a CFO’s success often hinges on their communication and leadership skills. A CFO must effectively communicate complex financial information to stakeholders, including investors, board members, and other executives. They need to explain financial strategies and the implications of financial decisions clearly and persuasively.
The CFO must also lead and motivate teams, fostering collaboration across departments. They need to be able to build relationships and work well with others, as they often serve as the bridge between the finance department and other parts of the business.
How the roles work together in synergy and support each other
The controller and CFO are roles that should complement each other. Each has distinct responsibilities, but must collaborate for overall financial success. The two will work together closely, with the controller focusing on the details of daily financial operations while the CFO maintains a strategic outlook.
The controller is the one who provides the CFO with the insights and data that help shape those long-term strategies, as they are responsible for producing the financial statements, which include the balance sheet, income statement, and cash flow statement. These serve as the foundation for the CFO’s strategic planning and analysis.
The controller also confirms that these reports comply with accounting standards and regulations, giving the CFO confidence in the information they are using for decision-making, so they can focus on analyzing trends, identifying opportunities, and assessing risks without worrying about the integrity of the numbers.
The controller develops and monitors budgets, tracking actual performance against planned figures, and both roles share the responsibility of financial forecasting. While the controller focuses on historical data and current performance metrics, the CFO uses this information to project future growth and evaluate potential investments.
Conclusion
The controller and CFO play distinct yet complementary roles within a business. The controller focuses on daily financial operations, accuracy, and compliance, while the CFO takes a broader strategic view, concentrating on financial planning and growth. Each role brings its own set of skills and qualifications to the table, with the controller often holding a CPA and the CFO typically having an MBA and leadership experience.
Both roles are needed: the controller provides the detailed data and reports that the CFO relies on for making informed strategic decisions. Together, they create a cohesive financial strategy that moves the business forward smoothly.
With both a controller and a CFO in place, a company’s daily financial tasks will be managed effectively while allowing for long-term planning and growth initiatives.
Next, check out our articles on outsourced bookkeeping services, 19 top fractional CFOs and how to value a small business.
Controller vs. CFO–What’s the Difference?
Here’s some answers to commonly asked questions about the difference between a controller and CFO.
What is the main difference between a controller and a CFO?
The main difference between a controller and a CFO lies in their focus and responsibilities. A controller primarily handles day-to-day financial operations, ensuring accuracy in financial reporting, compliance, and managing accounts. Their role is tactical and detail-oriented. In contrast, a CFO takes a strategic approach, focusing on long-term financial planning, growth initiatives, and overall financial strategy. The CFO analyzes data provided by the controller to make informed decisions about investments, resource allocation, and business development.
What qualifications are typical for a controller and a CFO?
A typical controller is often a Certified Public Accountant (CPA). They usually have a strong background in finance and may possess a master’s degree in business administration (MBA). On the other hand, a CFO typically holds an MBA or similar advanced degree, along with significant leadership experience. While both roles require financial knowledge, the CFO’s qualifications often emphasize strategic planning and management skills necessary for guiding the company’s financial direction.
How do the controller and CFO work together?
The controller and CFO collaborate closely: the controller provides the CFO with accurate financial data, including reports and analyses needed for decision-making. This support allows the CFO to focus on long-term strategy, using the detailed insights provided by the controller. Together, they align daily financial operations with overall business goals, so the organization is both compliant and strategically positioned for growth.
