Chief Financial Officer vs. Controller

At Frederick Fox, we often meet with Chief Executive Officers and private equity firms, and we conduct thorough intakes to understand if their portfolio businesses need a Chief Financial Officer or a Controller.

As a CEO, Founder, Marketing, or Sales Executive, you may wonder, "What's the difference?"

In an article on our Blog, we wrote: https://frederickfox.com/hiring-a-strategic-cfo-what-do-they-really-mean-and-how-do-we-interview-for-it-a-note-from-frederick-fox-recruiters/ about what is a Strategic CFO and what does this actually mean?

In this article, we will briefly explain what a CFO does versus what a Controller does and then outline 5 key points of differentiation.

What Does a CFO Do?

The role of a Chief Financial Officer (CFO) is an executive position that carries a significant amount of responsibility within a company. One of the primary responsibilities of the CFO is to develop and implement the company’s financial strategy. This includes analyzing market trends, identifying opportunities for growth, and managing financial risk.

In addition, the CFO serves as a key advisor to the CEO and Board of Directors, providing insight into financial performance and advising on strategic decisions. CFOs act as financial liaisons for investors.

The CFO is also responsible for overseeing financial reporting and compliance, ensuring that the company is in compliance with all relevant regulations and reporting requirements. The CFO is a critical member of the executive team, responsible for ensuring the company's long-term financial health and success.

What Does a Controller Do?

A Controller, also known as a Financial Controller, plays a crucial role in managing the financial affairs of a company. They typically report to the CFO or other key executives and serve in a more managerial role, overseeing the day-to-day operations of the accounting department. One of the key responsibilities of the Controller is to develop and implement internal policies and procedures to protect company assets, such as cash and inventory.

They are responsible for ensuring accurate financial reporting and compliance with relevant regulations. Additionally, the Controller is often the face of the accounting department, interacting with other departments and providing financial information and analysis to executives and stakeholders. The Controller is a vital finance team member, responsible for managing the company’s financial operations and ensuring the accuracy and integrity of financial reporting.

5 Key Points of Differentiation

1. Position in the Organizational Hierarchy:

• Chief Financial Officer (CFO):?The CFO is usually at the top of the financial hierarchy in an organization, reporting directly to the CEO or Board of Directors.
• Corporate Controller:?The Corporate Controller typically reports to the CFO and is responsible for overseeing the organization's accounting functions.

2. Responsibilities:

• Chief Financial Officer (CFO):?The CFO is primarily responsible for overall financial strategy, planning, and decision-making. They focus on high-level financial goals, financial risk management, and driving business growth and profitability.
• Corporate Controller:?The Corporate Controller is more focused on the day-to-day financial operations of the company. They oversee financial reporting, budgeting, accounting operations, compliance, and internal controls.

3. Focus on Strategy vs. Operations:

• Chief Financial Officer (CFO):?The CFO plays a strategic role, providing financial leadership and guidance to the organization. They are involved in big-picture decision-making, capital allocation, investment strategies, and financial analysis to support business objectives. They understand the operations of the business and which levers they can pull with BU Leaders to drive divisional and total company profitability & growth.
• Corporate Controller:?The Corporate Controller is more operationally focused, ensuring that financial transactions are recorded accurately, financial statements are prepared in compliance with regulations, and internal controls are in place to safeguard assets.

4. External vs. Internal Stakeholder Interaction:

• Chief Financial Officer (CFO):?The CFO often interacts with external stakeholders such as investors, analysts, regulators, and financial institutions. They represent the company financially and communicate financial performance and strategies to external audiences.
• Corporate Controller:?The Corporate Controller primarily interacts with internal stakeholders, including executive management, accounting staff, and other departments. They are responsible for providing accurate financial information for internal decision-making and compliance purposes.

5. Qualifications and Experience:

• Chief Financial Officer (CFO):?CFOs typically have extensive experience in finance, accounting, or related fields. They often hold advanced degrees such as MBA or CPA and have a proven track record of financial leadership. They usually become a CFO through two paths. One path is through the Corporate Controllership path where they are embedded in the Accounting and Budgeting Process. The path we often see more frequently is the CFO coming from FP&A, Corporate Strategy, or Planning Groups. There is usually the FP&A/Analytics CFO or the CPA Controller CFO, and you have to determine which is the best foundation, depending on the development stage of your business.
• Corporate Controller:?Corporate Controllers also have a strong background in finance and accounting. They may hold a CPA designation and have experience in financial reporting, budgeting, and regulatory compliance. They often have a public audit foundation and then move through corporate accounting roles, which include audit, financial reporting, or technical accounting.

In summary, while both the CFO and Corporate Controller play critical roles in managing the financial aspects of an organization, the CFO focuses more on strategic financial leadership and overall business growth, while the Corporate Controller is more involved in the day-to-day financial operations and compliance. The complexity of your business and its current stage of development will determine whether you really need a CFO or an operational accounting professional.

Frederick Fox (https://frederickfox.com/finance-recruiting/ ) is proven to understand your business needs at this level and deliver the right tailored fit for your business.