Nearly every business decision made has a financial impact on your company. Things like tracking revenue, filing taxes, staying on top of accounts payable and receivables, administering payroll and managing employee reimbursements are essential to your business.

While it may have been easy for the business owner to manage these various tasks when they were first starting out, it becomes increasingly difficult as the business grows — and distracts from the more important revenue-generating activities founders should be focused on‍.

“While it may have been easy for the business owner to manage these various tasks when they were first starting out, it becomes increasingly difficult as the business grows — and distracts from the more important revenue-generating activities founders should be focused on‍.” 

So, how are you staying on top of your company’s finances today? What kind of financial management support do you need at what point in the business lifecycle? If you’ve outgrown the DIY approach, and feel the need for more support than a bookkeeper or accountant can provide, you may be considering hiring a financial controller for your business.

We’ll tell you what they do, when you need to consider hiring one, and whether you have an alternative option. Keep reading to learn more.

When do you need a controller for your business?

Just like companies require a business leader, they also require a financial leader. That may be in the form of a bookkeeper, an accountant, a controller, a CFO, or a combination of these roles.

Business owners will quickly come to realize that they can’t handle every part of their business on their own. Often, the part of the business they try to hold to the longest is the finances. Don’t get us wrong — a founder should absolutely understand the in’s and out’s of their company’s finances. What we’re talking about is the day-to-day management and execution of a businesses various finance functions. Eventually, this becomes unsustainable and a distraction from the founder’s core job responsibilities.

‍Who you need and when you need them depends on the particular circumstances of your business. If you’re experiencing rapid growth and expansion, raising funds from venture capitalists or institutional investors, or expanding your business to new geographies making your finances more complex, it may be time to consider a controller-like hire for your business.

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Another way to consider when you’re ready to hire an experienced financial controller is to think of it in terms of revenue. Businesses with annual revenues between $25 and $50 million typically require more than just a bookkeeper or accounting manager. At that revenue level, you require accounting records based on Generally Accepted Accounting Principals (GAAP) and would likely benefit from someone who can advise as much as they take care of historical financial records.‍

What is a controller responsible for?

Controllers are responsible for financial management and regulatory compliance of a company, overseeing accounting operations and record-keeping as part of their role. They may also be responsible for managing other business-wide initiatives, including IT, HR, insurance, sales tax reporting and federal income tax reporting, among others.

Some of the core job responsibilities of a controller include the following:

Develop financial policies and processes

Keeping balanced books and filing your annual taxes is important regardless of the size of the company. But as you strategize to grow your business, you’ll require a deeper understanding of your cash flow and how to better manage it. The controller develops financial policies and processes that are tailored to your companies needs and goals.

Create financial reports and analysis

Another important role of the controller is creating reports for the CEO and other management to review and leverage for financial planning and when making strategic business decisions. Controllers become part of the higher-level management team and, therefore, help direct the business towards its goals. They’ll take on in-depth financial reporting and make recommendations to those ends‍.

Manage financial staff

Because a lot of their time is spent understanding the financial systems of the business and using that information to create better processes and plan for future growth, controllers won’t be taking the lead on responsibilities that typically fall under bookkeepers and accountants. They’ll manage the accounting department and those employees instead.

Other responsibilities of a controller may include:

• handle the insurance and risk management policies
• prepare, monitor, and update various budgets
• establish and manage internal controls
• develop tax strategies
• sign checks and bear fiduciary responsibility for operations
• protect company assets
• take accountability for financially-related reports and documents
• proactively advise on markets, trends, and best practices
• choose and administer accounting software
• pursue collections
• be the go-to for employee benefits information
• educate staff on business responsibilities
• be a link between HR and financial information such as employee records

A controller might not fulfill all of those tasks and they might take on others. This depends on the specific circumstances of the business.

What should I look for in a controller?

The controller manages all of the accounting activities of the business, including the accounting team which may consist of a bookkeeper, account payable and receivable, and a general accountant. They regularly ensure that the processes in place are the most beneficial and efficient.

Some key attributes to consider when reviewing candidates for the role of controller include:

• Ability to define, implement and execute processes within the organization. As part of their role, controllers develop processes, procedures, and information systems based on best practices and regulatory requirements. One of the greatest duties of a controller is to provide a proactive and meaningful understanding of the finances of the company and apply that to future analysis.
• Ample relevant experience. The role of financial controller is an intensive one and requires a great deal of relevant experience. It’s imperative they have a strong background in accounting and tactical experience in your specific industry. At least seven years of experience is a good starting point.
• Attention to detail, discipline and strong organization skills. Controllers must be diligent about details, timelines and accuracy of their work. They must also exhibit strong analytical skills and the ability to draw information and recommendations from financial data.
• Advanced education and certification. At the very least, candidates should have a bachelor’s degree in accounting or finance, but a master’s degree in business administration (MBA) is more suited to this role. Professional accreditation is highly valued and you might look for CPA’s, CMA’s, or CGMA’s. A combination of experience, education, and certification may also suffice.
• Proficient in GAAP. A controller must have meaningful expertise surrounding GAAP and extensive experience as an accountant. Knowledge of U.S. Securities and Exchange Commission (SEC) regulations is an added benefit as is a working knowledge of the Sarbanes-Oxley Act.
• Leadership and management capabilities. Beyond their qualification surrounding financial regulations and best practices, controllers are also managers of people and act as the link between the businesses’ financials and other managers and executives. For this, they’ll require exceptional communication and management skills. They’ll also need to conduct financial analysis, so analytical skills are key.
• Culture fit. As with any hire within your organization, culture fit is crucial to making sure the person who fills this role can do so effectively.

Other finance hires to consider in lieu of a full-time controller

When it comes time to bring on a controller, businesses have a few options. These include promoting from within, outsourcing, or hiring a CFO before a controller. We’ll discuss the pros and cons of each option below.

Promoting a bookkeeper or accountant

One of the pros of promoting your bookkeeper and/or accountant from within your finance department is that those individuals already know the business. They know how your operations work and they’ve already been working on your financials for years. This option costs less money than headhunting for an individual outside the company and it also costs less in terms of the time it takes to go through a hiring process.‍

On the other hand, cost shouldn’t be a deciding factor when it comes to protecting the financials of your business. Remember that solid financial management is what gives you cash flow and keeps you compliant.‍

Financial skills and knowledge of the business alone doesn’t make a good controller — they should be able to provide strategic information and develop controls and procedures as well. They also act in the role of manager, which not every financial expert can do.‍

Hiring a CFO before a controller

Some people think that a Chief Financial Officer (CFO) is the same as a controller. But a CFO does a lot more than a controller might, bringing a forward-looking strategic point of view to the organization. The pro here is that a CFO can technically do everything that a controller can do while bringing more strategy to the table. However, while accountants-turned-CFOs may help fill this gap in your finance management team, they may be more risk-averse and conservative in their recommendations which could hurt a business in the long-run.

But a CFO is a C-level executive that requires a very high salary. While paying that salary, you’ll still need to maintain an accounting team to take care of historical transactions, tax law, payroll, and accounts receivable and payable because these aren’t core to the CFO role.‍

‍Outsourcing a controller

By looking outside of the business for an outsourced controller, you can choose an individual who has learned best practices through lived experience. They can look at your current processes and procedures and streamline them to your benefit.‍

If you choose to hire a financial firm to do this job, you’re saving money in the case that you don’t have enough work for a full-time controller.

Using controller services means not having a person in the office, which may be difficult for a CEO who needs control over their team and up-to-the-minute insights and information. Financial firms have more than one client, meaning that they can’t always be available for you when you need them. They can also be expensive, with unpredictable costs depending on your monthly or yearly needs.

Source: https://www.zeni.ai/blog/financial-controller-startup