What is a Controller in Accounting and Finance?

Before we dive into what a Controller is, we should first talk about what a Controller is not. A controller is not a bookkeeper or even a staff accountant. They are not focused on mundane manual tasks and are not the ones who should be tracking down expense reports from your team. If your “controller” is doing transaction reconciliation, categorization, and other manual tasks, one of the following things is true:

1) You don’t have a controller. You have a bookkeeper with an inflated title

2) If #1 is true, you may also be significantly overpaying for this role

3) Your Controller is going to quit to find a place where they can do what they are good at! 

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Now, let's dive into how a controller can benefit your organization. 

A controller can be a terrific asset for an organization; however, if they get side-tracked by the busy work in the accounting organization, the company will miss out on their expertise. For a controller to be most effective in a business, they need to be able to focus on understanding the financials, not all the tasks required to generate them. 

With how diverse businesses are and how different the technology and talent can be in an organization, there are many ways to manage financial operations. However, the overall goals remain the same even with all the variables. Day to day, you want to meet the daily demands of bookkeeping while staying compliant. In the long term, you need sound reporting and reliable financial information for strategic business decisions. Understanding finance controllers, their roles, responsibilities, importance, skillset, and how they differ from CFOs, CPAs, and bookkeepers will ensure your accounting team is focused on the right priorities and getting the maximum value from each team member’s expertise. 

What Is a Finance Controller?

A finance controller oversees all the accounting-related activities in an organization to interpret and share financial information to benefit the broader organization’s ability to make business decisions. Their expertise will stretch from high-level and managerial accounting to financial accounting. The job includes tracking current and historical numbers, forecasting, and strategizing. 

A controller works at the highest leadership levels, ensuring not only that the work gets done but that it gets done correctly. For example, the controller at a publicly traded company ensures shareholder reports are published and financial statements are submitted to the proper regulators.

In many ways, they set the standard for the accounting team as the one who hires, trains, and oversees the rest of the department. Beyond the accounting department, the analysis performed by the finance controller guides the business on where to cut costs or increase efforts to drive additional revenue. 

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Why Is the Finance Controller So Important?

The easiest way to understand the importance of a finance controller is to look at the critical roles they play. According to a publication from the Institute of Management Accountants and Deloitte Development LLC, a finance controller is a steward, an operator, a strategist, and a catalyst.

A controller is a financial steward in charge of preserving assets and managing risks. They ensure internal controls are in place and followed by the team. For an external audit, the controller ensures compliance by working with auditors. They're also an operator because they're involved in operations, including setting up vendors, managing invoices, remitting payments, verifying records, and analyzing purchasing. Here, much of their work is overseeing the activities. The overall organization depends on the controller to generate forecasts and help create strategies. Their job is to track trends and report any material budgeting or expenditure variances. Finally, the controller is a catalyst for the rest of the department. They make sure there are internal rules and that everyone is following them. These rules are often specifically related to reporting to and filing with external regulators.

A controller is essential because they ensure the company keeps up with current accounting demands while helping it prepare for its financial future. Still, if they get bogged down in mundane tasks like bookkeeping, their financial strategy can suffer. 

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What Is the Finance Controller Skillset?

Because a finance controller delivers oversight and insights for so many aspects of accounting and finance, it makes sense they need a complex combination of both hard and soft skills developed through both education and experience. They need a deep understanding of accounting practices, their company's operations, and their specific industry. On top of that, a controller also needs leadership and interpersonal skills to coordinate with all the stakeholders of the business. 

Hard skills

Just like every other position in accounting, attention to detail is a must for controllers. They need to spot inaccuracies and discrepancies, even small ones buried deep inside ledgers and reports. Unlike every other position in the department, the controller is the final sign-off on the team's work, so they're the last line of defense against mistakes.

Once they have the right numbers, they also need to be able to use them to create actionable strategies. So, analysis is a key skill for a controller. It's not just getting the numbers for today; it's being able to look at them and know what they mean for tomorrow.

Although so much of their work involves numbers, there's not a lot of advanced math. So, a controller needs strong arithmetic and algebra, but they don't need a lot of calculus or statistics. However, they need to be able to interpret and provide guidance to the larger organization based on financial information. A great controller can perform various analyses to uncover valuable insights related to the business and identify areas to improve. 

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Soft skills

Like everyone leading a department, a controller needs to be able to communicate. Part of it is communicating with their own department to set clear expectations and motivate the team. They also need to take the team's work and explain it to other departments, finding ways to make the numbers make sense to those without an accounting background. Discussing the company's issues with cash flow with a senior accountant is one thing. However, explaining the causes and solutions to the head of operations requires a deep knowledge not only of accounting but also an understanding of how the other department fits into the broader business and what they prioritize. 

Do You Need a Degree to Be a Controller?

The first step to becoming a controller is a bachelor's degree in accounting or business administration. From there, you need to add a lot of additional study and experience. In fact, many companies now prefer a master's or MBA in accounting, and many controllers also hold the Certified Public Accountant (CPA) credential. Others may have Certified Management Accountant (CMA) or the Chartered Financial Analyst (CFA), but there is no industry-wide requirements for licensure.

In terms of a career path, many start as junior accountants, move up through mid-level supervisory positions and then become assistant controllers. From there, a select few become senior controllers. Generally, the process takes about ten years.

As is often the case, the requirements for experience and education rise in relation to the size of the company. So, a smaller company might only require five years, while a large public corporation only looks at candidates with decades of industry experience.    

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What Are the Finance Controller's Duties?

Because they are so high up in both the department and the company, there is a long list of duties for a finance controller, including everything from cash flow to audits and budgets to compliance.

Financial Analysis

The controller has visibility into the current financial state of the business and creates reports to dive into different areas to understand their performance. Their financial reports can uncover valuable information related to the operations of the business. This information helps the broader business make better decisions by understanding an accurate picture of the company’s finances. 

Manage Different Cash Flows

A controller creates forecasts for future cash flow needs as well as warning the company of any upcoming deficiencies. Depending on the company and where it does business, a controller might also be responsible for ensuring access to foreign currencies.

Liaise with External Audits

On top of managing any internal controls, controllers work with external teams for audits. Generally, this means making sure the team has access to the numbers it needs, reviewing the results of the audit, implementing recommendations, and presenting everything to the rest of upper management.

Help Build Company Budgets

Although typically a few levels up from direct participation, the controller makes sure the right people across departments have access to the data they need to set budgets, including data on past spending.

Ensure Internal and External Compliance

A controller needs a complete understanding of the complex reporting requirements for various external regulators. Part of their duties is the management of company resources so that all requirements are met fully and on time.

Additional duties for a controller include protecting the company against financial risk and finding ways to save on costs. Because of their senior position in the department, they are also often expected to act as a mentor for the rest of the staff.

In the org chart, the team leads for accounts payable, procurement, purchasing, and payroll can report to the controller.

Although there can be overlap with other positions in the accounting department, it's important to understand how a finance controller is different from a CPA, CFO, and bookkeepers.

The distinctions become important when managing your accounting department, so everyone on the team contributes maximum value to the bottom line.

CFO vs. Controller

Here, it really depends on the size of your company. For smaller organizations, you'd have one position covering all the associated duties for both a CFO and a controller. But at a larger company, there are more likely at least two separate roles, with the controller reporting to the CFO.

The CFO focuses more on financial strategy, while the controller oversees accounting.

CPA vs. Controller

Strictly speaking, it's not either-or with CPAs and controllers; many controllers hold the CPA credential. But the type of work you'd want your CPAs to do is different than what you can get from a controller.

CPAs are there to reconcile financial data. Controllers are there to implement and manage the accounting system your bookkeepers and CPAs work within. They oversee the department, ensuring everyone has the resources they need and that work is done properly.   

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Bookkeeper vs. Controller

Your bookkeeper is where your financial data starts. Your controller is where it ends.

A bookkeeper is responsible for entering data and keeping records up-to-date. They help you track income, expenses, bills, invoices, and payroll. A good bookkeeper can code data to the right accounts, helping you pay bills and run reports.

From there, the numbers go to the accountant, who manages accounts, reconciles invoices, and handles month- and year-end closes.

All of this accounting activity is overseen by the controller, who sets up the accounting processes and functions so they comply with generally accepted accounting principles, manage cash flow, and reduce exposure to risk. This is why so many controllers work with outsourced bookkeepers to support their work. They also generate forecasts and share critical information with company leadership.    

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When Should You Hire a Controller?

The ideal approach for a company deciding whether to hire a controller is to lean on the expertise of experienced finance professionals. As a company outsources bookkeeping and certain financial operations, its partners can recommend when to bring in strategic finance help. From there, companies can get expert guidance from a fractional CFO, who will know the ideal time to expand the finance department. A company can get the strategic guidance they need and not overpay for services that they aren’t ready for.

Generally speaking, a fractional CFO would recommend bringing on a controller when the company sees rapid growth. Suppose the CEO needs to focus on other priorities and can use their time better than handling the meetings with the finance team. In that case, a controller is a great resource to manage the numbers and provide the needed insights to leadership. Some of the signs that a controller would be a good addition to the team are:

• Rapid growth in revenue
• Increase in monthly transactions and complexity
• Greater needs for regulatory compliance
• A stronger need for strategic guidance from financial information
• Lacking internal controls and defined processes

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Why Would Your Controller Make a Bad Bookkeeper?

It's not that they can't do the job. Controllers start their careers as accountants, so they have experience working at or close to the financial front lines. A controller knows how to do a bookkeeper's job, but their time is much better spent on strategic work. 

But you don't want a controller doing a bookkeeper's work. It's just not an effective use of their time, talent, and or money! It would be the same as asking the manager of a NASCAR team to jump into the pit crew and help change tires during a race. They could do it, but it's a poor use of a skilled resource that could add more value doing other activities.

Instead, you want them to leverage their experience to help you set up better overall systems within the department, ensure compliance, and generate forecasts that help the company set realistic budgets.

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