What Does a Controller Do and Does My Business Need One?
by Gerard Vibar, on Dec 4, 2017
Welcome to Part 5 of our “Does My Business Need…” series, where we break through financial gobbledigook to help you figure out your business’s needs. Jargon out, simplicity in.
What does a controller do?
The role of a controller is to manage all the accounting functions of the company, ensure the integrity of processes, procedures and information systems, and provide timely, meaningful and understandable financial information and analysis. Controllers assist everyone in working together in their respective roles efficiently (providing support where need be - hey we're a team here!) to provide accurate and fresh financial data and analysis in a form everyone can understand.
Traditionally, a controller provides management with assistance in financial decision-making from information provided by the accounting team. The accounting team generally consists of an accounts payable and accounts receivable individual, and depending on the size of the company and whether it manufactures a product, there may also be a cost accountant and general accountant. A controller would also provide management with bills due to be paid and daily cash receipts to manage cash flow. Controllers act as the financial communicator between management and the accounting team and vice-versa.
A controller, depending on the size of the company, could have a combination of roles including accounts payable and/or accounts receivable functions (something we tend to see in smaller companies). Another function which a controller may perform is to conduct credit worthiness research and outreach with credit references for prospective customers looking for credit terms with the company.
When do I need a controller?
All businesses need financial oversight, but many business owners choose to tackle this task on their own to try to save money or keep a hands-on approach to managing the business. However, you should consider hiring a controller if:
- You are growing rapidly and are uncertain of the financial effect of certain business decisions (buying a new facility, exploring a new revenue stream for the business, etc.).
- You want accurate and timely information on the financial condition of your company.
- You are spending too much time on accounting functions when you'd prefer to be focusing on business development.
- You want to ensure you are in full tax compliance – state, local and federal.
- You have large amounts of inventory and receivables that need to be managed with both an accounts payable and accounts receivable person, respectively.
Can I use an outsourced controller? If so, how does that work?
An outsourced controller is a great option for a company that utilizes technology tools effectively to allow remote communications. Share file programs such as SmartVault or Hubdoc can be utilized to share documentation between management and the outsourced controller. Skype calls/meetings can be used to coordinate weekly/monthly goals and plans and financial tasks which need to be accomplished. With the evolution of technology, communication can be done effectively through the utilization of these web-based tools among the accounting and management team.
FAQs about controllers
How do I know my controller is doing a good job?
A good controller anticipates the information needs of management and provides timely financial data, analysis and recommendations. For example, a good controller would be able to provide to management information on customers that owe money beyond 60 days (pick your number of choice!), the impact on cash flow and offer suggestions on how to improve the situation. A good controller lets management know about all the important financial aspects surrounding the business.
How often should I be in touch with my controller?
Expect to speak with your controller often. You can certainly decide how often you want to speak and discuss all finances. Since a good controller is normally very "hands on," especially communicating with a company's financial team, management should be relayed all financial communications necessary to effectively manage the business.
What’s the difference between a controller, a CFO, and an accountant?
There are a few differences among a controller, a CFO, and an accountant, but collectively they work as a team to provide management with financial guidance. A controller is tasked with overseeing the day-to-day operations of the accounting team, ensuring the integrity of the company’s information systems and providing accurate, timely and understandable financial information and analysis.
A CFO’s responsibilities are more strategic in that they may include duties such as mergers and acquisitions, public and private financing, risk management, and investor relations. An accountant, on the other hand, is more of a technician who may assist in the accounting functions being performed and have a working knowledge of the tax implications of the company’s financial transactions.
In smaller businesses, some of these tasks may overlap and you might see a controller handle a majority of the CFO and accounting functions as well.
CFO: More strategic, member of top management team
Controller: Day-to-day-operations, ensuring the integrity of information systems and providing accurate, timely and understandable financial information and analysis
Accountant: the process of recording, summarizing, reporting and analyzing the results of operations with checks and balances to ensure the integrity of the information produced
Where do I find a good outsourced controller?
Paro! By a mile! All the controllers in the network are highly vetted; of the thousands of finance professional applicants who apply, Paro selects less than 2% to join the network. Yes, we're picky. And rightfully so. Your time is important and we don't want you spending your valuable time searching for the "right candidate" when we have one waiting for you!