Structuring Your Business: CFO, Controller or Both?

5/16/2016 - By Zachary Farrington

After weathering recession-driven cuts in administrative overhead, many businesses today are returning to a more growth-oriented posture. As they do, they often find that additional accounting and financial management resources are needed to reverse earlier cutbacks and manage new opportunities.

Beyond just adding resources, many business owners and executives are also pondering the best way to organize their growing financial operations. In particular, they are deciding how best to structure the company’s two senior financial management positions, company controller and chief financial officer (CFO). Often, the distinction between the two is not well understood.

One reason for the confusion is that the duties of a CFO and controller are often blended. While very large companies usually fill both positions, in small or mid-sized firms the same individual may have to wear both hats.

Here’s one simple way to distinguish between the two positions: The controller is responsible for accurately reporting what has happened, while the CFO is responsible for looking ahead.

More specifically, the controller’s responsibilities focus on accounting and record-keeping. This includes ensuring the accuracy of all financial records and the timely delivery of financial statements. Controllers are usually responsible for tax reporting and compliance and working with the CPA and auditors. They may also be responsible for managing information technology, insurance and other financial activities.

The CFO, on the other hand, takes the numbers presented by the controller and puts them to work. He or she interprets the financial results and determines courses of action going forward. The CFO is involved in budgeting, forecasting, maintaining relationships with banks and bonding companies, setting policies and procedures, and interacting with senior management. Properly distinguishing between these two critical functions is important – even if the same person fills both posts.