Difference Between CFO and Controller

Ben Paramore's Profile

Difference Between CFO And Controller

There are two types of financial leadership roles in a business - controller and CFO.

There are two types of financial leadership roles in a business - controller and CFO. They are not the same and neither of these is the same role as accountant. Some companies combine the two but the roles are different and if your business has any significant size to it and is planning to grow, you need both. CFOs and controllers usually come from an accounting background and start off as accountants. The accountant's role is that of basic record keeping and financial reporting. Some call it score keeping or bean counting and I guess that's appropriate. When, as an accountant, you get really good at accounting and financial reporting and develop the ability to manage several different activities and supervise people, you can become a controller. This job is more than a bean counter role.

The controller role is a natural progression from accountant; however, CFO is not necessarily a natural progression from controller. You don't just get the CFO role because you spent x-number of years as a controller. As the CFO, you must know accounting and financial reporting - that is a given; however, your skill set better be much broader. A CFO has to understand the operations of the business and how the financial system interrelates with operations. You have to understand capital structures and business funding and you must know how to manage cash. You have to understand business risks - both financial and non financial - and know how to mitigate those risks. You have to know strategy and be able to see the big picture. And you must be able to make decisions. Finally, the one CFOs most often miss, you must understand people and be an effective communicator. In the CFO role if people are still calling you a bean counter, either they are very ignorant or you are doing something fundamentally wrong in the performance of your duties.

                                      CFO and Controller Comparison

              CFO                                                                    Controller

 Analysis and Solutions                                                   Accurate Reporting

 Financing and Forecasting                                      Accounting and Reporting

    Critical Key Indicators                                                   Standard Formats

         New Views                                                                   Existing Status

Planning and Implementing                                                  Budgeting

  Big Picture Future Vision                                           Reporting Here and Now

      Functional Focus                                                           Financial Focus

         Compatibility                                                                 Compliance

             Strategy                                                                     Tactics

Coach to Functional Managers                                             Reporter

         Walks Four Corners                                            Stays in Financial Area

            What if................                                                              What is...........

Comments

Member's Profile

Ben, I find a few other key differences (I'm sure there are many, many more, although you did a good job covering the basics). Primary among them is that a good CFO has to be good at selling. You mentioned communicating in your blog, which is very true. But selling is something else, and CFOs are constantly selling. They sell the company to investors, they sell ideas to the executive team, and they help the CEO (and others) sell the vision and strategy of the company to the employees. It is ironic that CFOs do so much selling given that the typical training and career path of CFOs in no way prepares them for this. I can't imagine two activities farther apart on the introvert/extrovert scale than accounting and selling, but among the best CFOs the deep analytical mind can peacefully coexist with the outgoing salesperson within.

Another point on your note of where CFOs come from would be to add that many do not come up through accounting management, but rather through Finance. And by Finance I mean financial analysis, financial planning and budgeting, corporate financing, and business analysis/strategy. There are a lot of non-CPA/non-accounting CFOs out there.

Member's Profile

Thank you for pointing out that not every CFO comes from the Controller ranks...thank goodness. Quite frankly the corporate finance, investment banking and treasury professionals all reflect much needed diversity to the general CFO role, depending on the circumstances. I believe "Chemistry" with the CEO trumps most credentials.

Member's Profile

Ben, super comparison and great discussion!

On the differences between job titles, take a look at Proformative's

Free 5 Minute Career Insights Analysis

https://www.proformative.com/career-insights

It analyzes and benchmarks your skills to your specific job title and is great for figuring out the overlap between one job and the next, making your case in performance reviews, finding new career paths, making the case for promotion or increased compensation, finding gaps to fill in, etc.

Enjoy!

Best... Sarah

Member's Profile

Some excellent differences, and yet I have some more....

I like the selling difference since I always felt I was in selling mode, if not to my CEO, then to my peers and staff re ideas and change for continuous improvement. But at another level, I keep the needs of the company in mind as I sell our bankers and investors on the wisdom of my company being a user of their capital and vendors on giving me the best price and terms.

Another difference is controllers usually are tied to budgets and comparing historical info to them, while CFOs concentrate on business models built with the key performance metrics interrelationships so "what if" analysis is always possible. So by nature controllers are tied to the past and history while CFOs change their view to the future and trying to affect it.

Controllers usually concentrate on optimizing current results especially from an expense side. CFOs add a view of controlling the future through strategic planning and innovation.

Controllers are by nature reactive and CFOs need to be proactive.

Controllers concentrate on the costs of an enterprise while CFOs add a full business model approach and see increasing revenues as giving even more payback for time and attention.

Finally as CFO I have been also managing the human capital and technical resources and often the operating resources of my Company. So learning how to select, on board, train, motivate, develop incentives and terminate associates to maximize inspired performance has been an important role. So has the proper use of technology to optimize its ROI to the company.

So maybe a last difference in the difference between a manager and a leader!

Member's Profile

https://www.proformative.com/provider/candidates-chair/resource/finance-roles-comparison-cfo-controller-roles

While every company will ultimately determine what each role will include based upon their needs, culture, etc. - this is a starting place that I've used for a number of companies that I've interacted with as chair of FENG in the Minneapolis area.

This is more duties than type of person.

Member's Profile

Corporate culture also plays a role in the type of CFO you find in a particular company. I worked in two very different cultures. The first being somewhat more open and forward thinking wanted a CFO that could look at the numbers, draw conclusions and suggest options and alternatives. The last, the CEO wanted (as Sgt Joe Friday would say) ' just the facts, Mam, all we want are the facts' even if they didn't tell the truth. The CEO and the businesses did not want financial partners they wanted clever bean counters, no one to play devil's advocate or to dig a little deeper. More time was spent trying to creatively report the results than was spent trying to understand where the business was going. Consequently at the first company you had CFOs who had run businesses or went on to run businesses, at the latter you had the proverbial ink stained wretch capable of turning out the best damned budget package in the world and still chained to a 10 key.

Member's Profile

For the most part the exchange is spot on. The focus should be on the successful CFO in a successful organization. Within this culture the the COO role if it exists becomes less important. The CFO, weather coming form a financial or accounting background will be grounded in financial facts. He/she has the ability to chart the best course among a number of likely good options by bringing the strategy and value prop into vision.

Member's Profile

I work for a small business (98 employees)and I play the role of bookkeeper, accountant, controller and CFO. Basically I'm the beginning and end of the companies finance and accounting until it reaches our CEO. This is my first job in accounting/finance out of grad school so it is certainly great experience. However, I do find that my greatest challenge is differentiating between the various functions I perform. I found this discussion useful because it helps to step back and point to different aspects of my role in the company and identify what I am doing well and what I need to do better. Because I am the one to record every transaction and produce financial statements and management reports, I often find it difficult to take that step out of the detail of bookkeeping and accounting to focus on big picture issues and to be able to effectively communicate our company's financial position to management in a way that provides concise, forward-looking and actionable information. I need to share information that allows our CEO to make good business and financial decisions. Does anyone else have this problem, any suggestions on how to separate these roles within one person? I see the simple solution is to hire an additional person to do bookkeeping, but in a small business that is not an option at this point in our company's life cycle. I am very ambitious and determined to perform at the level of a Fortune 500 CFO. Working in small business has made this a challenge because before I was hired there were only 20 employees and no internal accounting structures so I have built every policy, process and report myself with no prior experience. I am in need of advice and exposure to other Controllers and CFOs experience so any advice or shared experience would be greatly appreciated.

Member's Profile

First off, congrats on your positive, can-do attitude. That is working very much in your favor. Second, it's great to see you grab the bull by the horns and lay out processes and procedures for your company. Many companies of greater size haven't yet gotten around to this.

So far as looking for advice, I would advise that you simply ask your questions of the forum as they come to you. It is a bit hard to offer general advice (although I encourage those who want to), but easy to answer a question such as, "What should I include in my monthly financials (with appropriate company background as context)" or "What's the best way to finance XYZ at my company" and so on. This forum has been very responsive and loves to help.

So way to go and keep it up. And let us help you as best as we can as you continue to succeed!

Member's Profile

Lindsay, I have spent most of my working life in smaller companies by preference. The ability to have large influence on operations and to become knowledgeable about the products, employees, customers, suppliers, etc. expands your breadth of experience if you insert yourself into it. My suggestion is to think forward in CFO mode while you are performing your accounting/controller duties; there is no reason to compartmentalize those roles in small-company situations. Train yourself to spot trends within the operating {production and so on} and financial information and create methods for cross-referencing those trends and communicating them to ownership. Keep in contact with the banks, major suppliers, operating supervisors within the company, customers and so on. Schedule the time and adhere to that schedule.

As to the hiring of additional staff, your guiding thought there should be whether having that staff will allow you to better use your time and knowledge to bring that added kick in value to the company, and thereby improving your abilities to help the company profitably grow even more than it apparently has. Another 'small-company' thought - if you find yourself consistently working 50 or 60+ hours and 6+ days per week, the additional staff hire will be beneficial. Regardless of what some folks will say, you will find that is not a path that you can run for long. It will detrimentally affect your entire life; you must set limits even for work.

Hopefully that will help you a bit.

User picture

Hi- Very nice article! I am in the same boat as some else posted in that I have to handle everything from issuing checks, posting transactions, working on strategies, financial reporting and closely working with the President. It is a small firm, but due to limitation of resources, they cannot add more bodies to help out. The job is challenging with great exposure, but I end up spending a ton of time at work. Although my official title is CFO, I get to wear a lot of hats as Accountant, Controller, Financial Analyst, etc. By the way, I am not a CPA. I have a BS with Accounting as major and MBA with focus on Technology Management. I also have many years of experience in the auditing field and am also a Certified Information Systems Auditor. I do stay current by taking online classes in Accounting topics, Finance and IT. Sites like Proformative also help me in doing a better job.

Topic Expert
Member's Profile
SBA * Consulting LTD

Nicely done blog. I (like most of the others) wish to add one more feature set.

CFO's are the ethical center of their company (shared with the General Counsel).

In pursuit of increasing the bottom line it is way too easy (I'll borrow from Obi-Wan Kenobe) to go to the "Dark Side".

Member's Profile

Lindsay and other younger folks - I hate to say this since I know it will be unpopular but I found the best way to truly increase your value to yourself and in the market is to change companies. I worked for the same employer for 15 years, 19 including acquisition, and after that worked for 3 different companies in 5 years and then became consultant now where I have worked with about 30 more companies in the last 5 years and the volume of insight you gain with each company is exponential. I do not regret any of my choices because the first 20 years were great, I learned a lot and progressed from A/P clerk to Controller (9th grade dropout to MBA in Accounting) and from a $40M-$2B revenues.

Alternating between large and small companies is very educational & mind-expanding. There are obviously pros and cons to each and eventually you may have a preference, but I recommend checking it out first-hand to truly broaden your perspective on things.

In the last five years I have worked with companies of all sizes so now including some
start-ups with one employee added to my experience with companies of over 100,000.
You would be amazed at how having seen both benefits you and each employer where
you subsequently work. The experience you gain from this is what I think is required to go from being a Controller to a successful CFO of any size company more so than any
other action you can take to make the transition and same for becoming a consultant.

Member's Profile

Some of the aforementioned Controller-CFO differences are subtle. Each role's career progression is not.

The next logical role for the controller is CFO. The CFO's next likely role is ultimately the CEO position. I would even argue that some of the best CFO's in the world (that's you) could be performing the CEO function right now.