There are two types of primary financial leadership roles in a business – a controller and a CFO. They are not one and the same, and the decision as to which one a business needs, or whether to have both, can be a challenging one and business-specific. The skillsets necessary for the two roles can often become blurred, particularly for startups or smaller businesses that don’t have extensive reporting requirements or a need for wide-ranging strategic oversight. There is a clear distinction, however, between the two roles, and it’s important the business owner or CEO understands the difference in order to make the appropriate hire and to capture the best value-add for the company.
The Role of a Controller
The work of a controller, or accounting manager, tends to be more technical and tactical than operational. A controller’s job is to make sure the company’s books and records are in order. Controllers ensure financial statements are complete, accurate and compliant, and oversee various audits of historical information regarding the business and its accounting. Having accurate numbers is crucial, as these reports and metrics form the basis of future decision-making. This is one of the reasons a controller is often an early hire in a startup or a small business.
The Role of a CFO
A CFO’s job is more operational and management-related, and greater in scope. A CFO must know, and ultimately be responsible for, the accuracy and compliance of the company’s accounting and financial reporting—the work that would be in the controller’s domain. But the CFO also has a responsibility to take the numbers and reports a step further, to understand the story behind the data and use it to affect future actions. The CFO, for instance, would study the financial history of the company and manage various projections to help management determine whether to borrow from a bank or sell equity to fund an acquisition.
The CFO is a strategic role. He or she takes on management of processes and drives the planning process, often acting as an adviser to the CEO. In that sense, the CFO also is essentially responsible for eliminating surprises to the CEO and other key executives having to do with issues that might have significant financial consequences.
Decision Based on Specific Needs
A company’s decision whether to hire a controller or a CFO comes down to what its needs are now and its plans for future growth. A startup just getting launched may not yet need a CFO’s oversight, and an accountant might be sufficient. But a company experiencing fast growth might do well to consider the value of installing a CFO to help direct goalsetting and inform future decisions. It’s also important to note that, because of the differences in the required skillsets, a controller does not necessarily progress into a CFO. This explains why many companies will look outside (and outsource) when it decides to establish a CFO role.
If hiring a controller or a CFO outright is not feasible for a company’s budget, there are other options available. Outsourced finance services are available, with customized solutions to help entrepreneurs build and grow their businesses. A small business can utilize these solutions to attain, for instance, a part-time or a virtual CFO, paying only for the services received. This can be a helpful step in adding strategic financial leadership to a growing business.
Mr. Lieberman is the founder and CEO of The CEO’s Right Hand, Inc., a New York-based consulting services firm that provides the full breadth of strategic, financial and operational advice to founders, CEOs and Executive Teams. As an experienced entrepreneur himself, he has served in various C-suite leadership and advisory roles across a wide spectrum of industries.
His first venture was CMR Technologies, a FinTech company based in San Francisco serving the investment management consulting space. From CMR, Mr. Lieberman formed Xtiva Financial Systems, a software company specializing in sales compensation solutions for the financial services industry. Mr. Lieberman served as Xtiva’s CEO, building the company to over $10 million in revenues and 100+ clients. He also served as the President and CFO for Interactive Donor, a New York-based Benefit Corporation which incentivizes charity through rewards.
Mr. Lieberman holds double Masters degrees, one in Business Administration and the other in Computer Science from the University of California at Los Angeles. He completed his Bachelors in Computer Engineering from the University of California at San Diego.