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What Is a Controller?
When deciding whether or not your business could benefit from a Controller, your first question is likely, “What does a controller do?” Since a Controller can help you as your company’s finances grow and become more complex, it’s important to understand this role. Let’s dive in.
A Controller is a high-level manager responsible for overseeing the financial operations of a company. They are part of the leadership team and play a key role in ensuring the business stays on track financially. Controllers are usually found in larger organizations, where they manage accounting systems and financial reports.
What are the functions of a Controller? Their focus is on making sure everything related to the company’s finances is accurate and well-organized. In some companies, the Controller is also called a Financial Controller. They report to top executives, such as the CFO (Chief Financial Officer), and help ensure the company’s financial practices meet professional standards.
What Is a Controller in Accounting?
A Controller in accounting is a manager responsible for overseeing a company’s financial records and reports. In terms of Controller duties and responsibilities, they ensure that financial statements are accurate, completed on time, and follow legal standards. Controllers manage the accounting team and track the company’s budgets and expenses. They also provide key financial information to executives to support decision-making and planning.
What Does a Controller Do?
Controllers are responsible for providing oversight and management to the organization’s financial reporting, budgeting, forecasting, accounting processes, compliance with legal regulations, and other financial activities. Additionally, controllers may be called upon to manage the organization’s cash flow and develop financial strategies in order to maximize profits. Controllers are also responsible for measuring performance against budgeted targets and providing advice regarding operational risks or opportunities.
Types of Controllers
Perhaps more important than the question, What is a controller, is what types of controllers are available for your business. In reality, controllers can take on different roles depending on the business’s needs. While they all focus on managing financial operations, some bring specialized expertise based on industry or company structure.
The answer to the question, “What is a controller in business?” varies from industry to industry. For instance, a corporate controller oversees the entire accounting function of a business. They manage financial reporting, ensure compliance with regulations, and maintain internal controls. This role is common in mid-sized to large companies.
A divisional or regional controller works within a specific business unit or geographic area. These controllers focus on localized financial performance and reporting while still following the company’s overall financial policies.
As we continue to define a controller in accounting, we should also comment on plant or manufacturing controllers. These are typically found in businesses that produce physical goods. They specialize in cost accounting, inventory control, and efficiency tracking related to production processes.
A project controller is usually found in industries with large, complex projects like construction, engineering, or software development. They monitor project budgets, timelines, and financial performance to keep things on track.
As you imagine what is a controller in a company like yours should be to make the grade, you’ll find that understanding which type of controller best fits your business can help ensure your financial operations are properly managed as your company grows.
Skills Controllers Need to Succeed
- Strong analytical ability to evaluate financial data and identify trends or problems.
- Attention to detail to ensure accuracy in financial reporting and compliance with regulations.
- Effective communication skills to explain financial information clearly to others.
- Leadership skills to manage and motivate an accounting team.
- Knowledge of accounting standards and legal requirements related to finance.
The Difference Between a Controller and a CFO
Controllers and CFOs both oversee the financial operations of an organization, however their roles are very different. The responsibilities of a Controller typically include day-to-day accounting activities such as accounts payable/receivable, payroll, budgeting and cash flow management. In contrast, a CFO (Chief Financial Officer) is involved in higher level decisions such as strategic planning, capital investments, and mergers/acquisitions. A CFO will be more involved in the company’s overall performance and financial health than a Controller would be.
Another distinction to make in hiring is between an Accounting Manager vs Controller. An Accounting Manager is responsible for managing the daily activities of an organization’s accounting department. They may oversee bookkeepers, accounts payable/receivable clerks, payroll staff and other individuals within the department. An Accounting Manager will typically report to a Controller or CFO, and they are not responsible for higher-level tasks such as strategic or capital planning. So, if you are looking to understand “what does an accounting Controller do?,” they would likely manage the accountants for the company.
Job Responsibilities & Functions of a Controller
Your Controller should not be doing data entry. The Controller’s main job responsibility is to manage the accounting department from a high-level. Compared to your Bookkeeper, Staff Accountant and/or Accounting Manager, the Controller is focused on ensuring the accuracy of the financial statements. Controllers are also responsible for taking the financial information, interpreting the results and communicating them to management and non-accountants in a way that they can understand. A Controller will also suggest improvements to achieve the goals for the business. Financial Controllers report to the Chief Financial Officer (CFO). Their day-to-day duties include the preparation of operating budgets, overseeing financial reporting, and performing essential functions related to payroll.
Telling the Story
The most important job of a Controller is to “tell the story” of what’s going on in the business. They communicate the story through graphs, charts and pictures to show where the business is and where is has the potential to go. In order to do this successfully, the Controller must have a thorough understanding of the goals for the business so they can determine the most important aspects of the financial package to highlight. The Key Performance Indicators (KPIs) and ratio analysis, including gross profit metrics, are areas the Controller will focus their efforts.
Internal Controls and Reducing Risk
The Controller is also in charge of internal controls and takes responsibility for fraud prevention within a company. They create and prepare internal control procedures for their company for both the financial and accounting departments. Controllers are tasked with reducing risk in a business through compliance, regulatory reporting and safeguarding assets. The strategies that the Controller creates to minimize financial risk are based on the goals for the business.
Management
In most, if not all accounting departments, the Controller will report to the CFO. They will also manage and support the Accounting Manager and hold them accountable for producing accurate and timely financial information. The data must be accurate in order for the Controller to analyze it and fulfill their job responsibilities. Once the Controller has signed off on the financial package, they send it to the CFO for them to present to management and key stakeholders in the business.
Qualifications for Controllers
Now that you understand “what is a Controller,” you also need to understand how to find a qualified one. When hiring a Controller, it is important to look for an individual who has extensive experience in the fields of accounting and finance. A Controller should have knowledge of Generally Accepted Accounting Principles (GAAP) as well as expertise in budgeting, forecasting, financial analysis and strategic planning. Especially if you need them to manage your accounting team, they should possess strong leadership skills and be comfortable working in a fast-paced environment.
Answering the question “what does a Controller do in a business?” also informs the educational background to look for in candidates resumes. Ideally, the Controller should have a bachelor’s degree in Accounting or Finance and may even have an MBA in addition to their relevant certifications. Many larger companies also prefer controllers with CPA (Certified Public Accountant) credentials as well as experience with accounting software.
Why Are Controllers Important?
Ultimately, the role of the Controller is to ensure that the business’s financial activities and financial reporting are carried out in an efficient and accurate manner. In a word, the answer to “what is a Controller?” is accuracy. The risks of not having a Controller include the potential for financial mismanagement, inaccurate reporting, and inadequate forecasting. Without a Controller to provide oversight and guidance, there is a much higher risk that errors may occur which could lead to significant financial losses or compliance issues.
When Does a Business Need a Controller?
All growing businesses need to be able to articulate an answer to the question “what is a Controller in finance?” because as they grow, their accounting needs typically intensify. Any businesses with complex accounting requirements may find it beneficial to have either a full time or fractional Controller. Businesses that require tight financial control, such as manufacturing or healthcare organizations, often rely heavily on controllers to provide the necessary oversight and should have a full time Controller.
Companies that are growing rapidly and looking to scale may also benefit from having a fractional Controller, a Controller who works on an as-needed basis and often works remotely, on board as they can help ensure that the finances remain organized and accurate.
Fractional Controller vs. Full-Time Controller: What’s Right for You?
Whether you need a fractional or full-time controller in accounting depends on your company’s size, complexity, and financial goals. But what is a controller in terms of fractional and full-time functionality?
A fractional controller is a part-time financial expert who works with your business on an as-needed basis. This is a good option for companies that don’t yet require full-time financial oversight but still need help with things like closing the books, reviewing financial reports, or implementing new systems. Fractional controllers often work remotely and bring a flexible, cost-effective solution.
A full-time controller is best for companies with more complex financial needs. These businesses often have multiple revenue streams, a larger accounting team, or require regular oversight of budgets and forecasts. A full-time controller is deeply involved in the day-to-day operations and is often a key player in long-term financial planning.
Choosing between the two comes down to where your business is today and where you want it to go. If your accounting needs are starting to grow but don’t yet justify a full-time hire, a fractional controller can fill the gap. As your company scales, bringing on a full-time controller can add structure and consistency to your financial operations.
Key Takeaways: What Does a Controller Do?
- Controllers are high-level managers responsible for overseeing a company’s financial operations, ensuring accuracy in financial reporting, budgeting, and compliance with regulations. They play a crucial role in managing the accounting team and providing key financial information to support decision-making.
- A Controller’s main responsibilities include financial reporting, cash flow management, and developing financial strategies to maximize profits. They focus on interpreting financial data and communicating insights to management effectively.
- Controllers typically have a bachelor’s degree in accounting or finance, along with certifications like CPA. Their skills include analytical thinking, attention to detail, effective communication, and leadership, making them essential for organizations with complex financial needs.
Frequently Asked Questions About Controllers
Do Controllers make a lot of money?
Controllers typically earn a competitive salary, which can vary based on factors such as location, industry, and experience. On average, they can make anywhere from $80,000 to over $150,000 per year.
What is the main function of a Controller?
The main function of a Controller is to oversee a company’s financial reporting and ensure the accuracy of financial statements. They also manage budgeting, compliance, and internal controls.
What qualifications do you need to become a Controller?
To become a Controller, a bachelor’s degree in accounting or finance is usually required, along with relevant work experience. Many Controllers also obtain certifications such as CPA (Certified Public Accountant) or CMA (Certified Management Accountant).
What skills are important for a Controller?
Important skills for a Controller include analytical thinking, attention to detail, effective communication, and leadership abilities. Knowledge of accounting software and financial regulations is also essential.
How does a Controller differ from a CFO?
A Controller primarily focuses on managing the company’s financial reporting and accounting operations, while a CFO is responsible for the overall financial strategy and management of the company. The CFO typically has a broader role in decision-making and strategic planning.
What industries employ Controllers?
Controllers can be found in various industries, including finance, manufacturing, healthcare, and retail. Almost any organization that requires financial management and reporting will employ Controllers.
How do Controllers support strategic decision-making?
Controllers provide accurate financial data and analysis, which helps management make informed decisions about budgets, investments, and resource allocation. Their insights are crucial for long-term planning and performance evaluation.
Can a Controller work remotely?
Yes, many Controllers can work remotely, especially as technology allows for digital communication and financial management tools. However, some organizations may prefer Controllers to be on-site for collaboration and oversight.
What is the career path for a Controller?
Many Controllers start as accountants or financial analysts before advancing to managerial roles. With experience, Controllers can move up to positions like CFO or other senior executive roles within the finance department.
Do Controllers help with tax planning or filings?
While a controller job entails maintaining accurate financial records, they typically do not handle tax planning or prepare tax returns. However, they play a key role in organizing the financial data needed by tax professionals and ensuring that the company stays compliant with tax regulations.
Can a Controller help improve cash flow?
Yes. Controllers can help monitor and improve cash flow by analyzing trends, identifying inefficiencies, and recommending strategies to manage receivables, payables, and expenses. Their insight can help the business maintain healthy cash reserves and avoid shortfalls.
Is industry experience important when hiring a Controller?
Industry experience can be highly valuable when hiring a controller. Someone familiar with the specific challenges and regulations of your industry may be able to provide more targeted insights and support. As you endeavor to assess what is a controller in terms of your business needs, you should know that industry knowledge might not be a requirement, but it can help a controller make a faster and more effective impact.
What software do Controllers commonly use?
Controllers often use a combination of accounting and financial management software. Common platforms include NetSuite, QuickBooks Enterprise, Sage Intacct, and other ERP systems. They may also use Excel, budgeting tools, and data visualization software to analyze financial data and generate reports.
Can a small business afford a Controller?
Yes, small businesses can often benefit from hiring a fractional controller. This part-time option allows companies to access high-level financial expertise without the cost of a full-time salary. Fractional controllers can help with financial reporting, budgeting, and improving financial processes on a flexible basis.
Is a Controller above a VP of Finance?
No, a controller is typically not above a VP of Finance. The VP of Finance often holds a higher-ranking position and focuses on broader financial strategy, investor relations, and long-term planning. If there’s any confusion over the question, what is a controller in accounting, remember this: Controllers usually report to the CFO or VP of Finance and are responsible for managing day-to-day accounting operations and financial reporting.
Are Controllers considered executives?
Controllers are often part of the leadership team, but whether they are considered executives depends on the organization. In some companies, especially smaller ones, the controller may be seen as an executive due to their high-level responsibilities and involvement in decision-making. In larger organizations, they are usually viewed as senior managers reporting to the CFO.
This post was reviewed by our team of accounting and financial experts. TGG’s mission is to make business owners’ lives better through excellent financial management. We strive to provide the most up-to-date and objective information on accounting-related topics so our readers can make informed decisions based on factual content. All posts undergo a review process with at least one member of our Leadership Team to ensure accuracy.
This post contains trusted sources. All references are hyperlinked at the end of the article to take readers directly to the source.
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Matt Garrett is the Founder and Chief Executive Officer of TGG. He is a regular speaker across the country on behalf of Vistage educating business owners on the need for sound financial practices, and is Vice President of the Board of Directors of FINACA. Under Matt’s leadership, TGG has received the following recognition: INC. 5000 top companies in the U.S. five years in a row; one of “San Diego’s Fastest Growing Companies” the past four years; and is among San Diego’s “Best Places to Work.”
