CFO vs. Controller: What a Small Business Really Needs

I get calls every day from small business owners who say they need a CFO. And every day I have to tell them “well, no, you probably don’t.”
What defines the CFO role in a small business… and do you need one?
CFO or Controller? Which is right for your business?
Do you really need a CFO … or is a controller the right choice? Maybe a fractional team of both would be best. Find out more.

Here’s how to decide for yourself.

What Problem are you Trying to Solve?

Let’s be clear. A true CFO brings skills and experiences that cross multiple finance disciplines, including:

  • business strategy
  • capital formation (raising money) and banking
  • budgeting and forecasting
  • data analytics and trend spotting
  • treasury & risk management
  • M&A, etc.

Controllers, on the other hand, spend their day in the accounting function and are expert at solving problems like:

  • cash flow projections
  • financial statement design & reporting
  • collections issues
  • vendor negotiations, etc.
  • balance sheet review (and clean up!)
  • month end journal entries

Its not the CFO but the controller role that provides the most day-to-day value for a small business.

If you can correctly identify the problem in your business, you’ll make a better decision about who can solve it. On the other hand… if you can’t define the problem, perhaps a CFO is exactly who you’re looking for!

Cost and Use: CFO vs Controller

Because the salary for a CFO is roughly twice that of a controller, it’s important to assign the right tasks to the right person. In general, we see businesses of less than $25 million in revenue make use of a “Fractional” or part time CFO — meeting with them on a monthly basis to review results and plan strategy. A controller’s duties, however, tend to be weekly or daily, even in a business with as little as $1 million in revenue.

The Controller will assure that things are done right, while the CFO will be making sure the company is doing the right things.

Both fulfill an important role. But its unusual to find one person who has both skills.

CFO Job Description

Need a little more detail on the relative job descriptions?

CONTROLLER. The controller is the brains of the day-to-day accounting functions. This typically manages all the Accountants and Clerks, assigning duties and balancing workloads. In addition, the Controller is the guardian of the balance sheet, and takes responsibility for month end General Journal entries that will keep everything in check. When they are not keeping the wheels turning, they should be forecasting cash flows, managing the budgeting process, and monitoring credit balances. Here’s a simple Controller Job Description.

CFO. The CFO duties are as varied as the companies that hire them, but in general include all forward-looking tasks from planning strategy to modeling mergers. In smaller companies, CFOs take on direct management control of multiple functions that might include HR, IT, and Operations. As the company grows larger, CFOs tend to be the strategic member of the executive team, and often the chief “explainer” for complex operational and financial issues, market trends, competitive concerns, compliance issues, and more. Here’s a simple CFO Job Description.

Choose Wisely

It would be unusual to find one person who will happily — and effectively — perform both CFO and Controller duties.

Sure, there are skills that overlap.

But the Controller role demands an extreme attention to detail, knowledge of accounting theory, and the ability to wade through a large volume of transactions to fix accounting problems.

The CFO, meanwhile, ought not to be buried in accounting detail. Instead, they should be worried about the big picture — about ratios and trends and whether the company is meeting its obligations to banks, vendors, investors, and employees.

Of course I’m biased, but only a team can efficiently provide both CFO and Controller (and accountant and clerk!) roles for a small business.

So rather than hiring EITHER a CFO or Controller… consider a fractional team approach, like that offered by Fuse Financial Partners.

Dedicated to your profits

Originally Published

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