So, you’re a business owner. Right now, business is going well and things are looking up. Revenues are growing, but you don’t want to make any critical mistakes. Your bookkeeper is doing a great job, but you feel like you need more from your financial data to make important decisions. Questions keep circling back and forth in your mind making you stress more and more. One, in particular, is, “Do I need a CFO or a controller? Do I need both?” A lot of businesses struggle with this decision and aren’t sure which to hire. Let’s delve into that question.
There are two types of financial leadership positions within a business – controller, and CFO. They are not the same position, and they’re certainly not the same position as a bookkeeper. Some companies are fine with only a controller, but if your organization is expected to continue its growth trajectory, you might need both. So, what is the difference between the two roles, and how will you determine if you need one or both?
Typically, companies start with a bookkeeper/staff accountant, then a controller and ultimately move upstream and hire a CFO. In a general sense, bookkeepers provide day-to-day execution, controllers are analysts and CFOs are all about strategy.
|Funding – Capitalization||Cash Flow||Accounts Payable|
|Pricing Models||Forecasting||Cut Checks|
|Acquisition – Diligence||Vendor Selection||Reconcile Bank Accounts|
|Governance & Compliance||Internal Financial Visibility||Journal Entries/GL|
|Accounting Software Selection||Accounting Software Implementation||Billing and Invoicing Monitoring Cash Levels|
By understanding the function of each role listed above, you will be able to determine whether or not you need a controller or a CFO. Notice, none of the roles above mention taxes, as this is typically handled by your CPA at the end of the year. The roles listed above focus on the key financial responsibilities of running the business, not year-end taxes.
The next question is “How much will it cost me to hire a controller or CFO?” According to the 2016 FERF (Financial Executives Research Foundation) survey, compensation for controllers and CFOs looks like this: