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Comparing the Role of CFO and Finance Controller

Ashish M. Shaji

| Updated: Nov 16, 2021 | Category: CFO Service

Comparing the Role of CFO and Finance Controller

The terms CFO and Finance Controller are used interchangeably by many and they are treated as synonyms of each other but there is a line of difference in terms of their roles in a company. Their difference can be understood by knowing the operations that come with their roles. In this article, we shall discuss the difference between Chief Financial Officer and Finance Controller.

Defining CFO and Finance Controller

CFO-

A CFO is involved in the financial department’s day to day functioning but not directly. A CFO focuses on economic strategy and forecasting, such as reviewing and comparing the financial situation of the company, generating forecasts for the future of the company and oversees the capital structure of the company.

Finance Controller-

A Finance Controller is directly involved in the day to day operations of the financial department and he monitors debts and compliances, provides information to the external auditors and financial information for filing purposes.

Difference between CFO and Finance Controller

The difference between these two terms has been provided in the table below:

S.No.CFOFINANCE CONTROLLER  
1Primary focus is on financial strategyPrimary focus is on tactical accounting
2A CFO is the senior executive who is responsible for managing the financial actions of the company.  Finance Controller is a senior level executive acting as a head of accounting who takes care of the preparation of financial reports like balance sheets etc.  
3A CFO strategizes for the future of the company and pushes the company forward and provides advisory services to stakeholders over critical business decisions.A Finance Controller performs his task in a manner that helps in the day to day working of the accounting department.
4A CFO does strategic planning for an organization by identifying business risks and taking major decisions to tackle those risks.A Finance Controller implements ways to ensure a robust company’s accounting procedures.
5A CFO along with the CEO provides new ideas which are then communicated to employees and the results are measured with the goals of the company.  A Finance Controller churns out ways to enhance the profitability of the company and reviews the expenses of the company.
6CFO plays a critical role in leading the company in the right direction financially through his leadership abilities and skills and also ensures company-wide accountability.  Finance Controller comes up with efficient and useful strategies that raise the profit margin and increase the productivity of the employees.

What does your Company need?

The accounting department may lose out on some attractive opportunities if there is no finance controller in the organization. Likewise, if there is no CFO, the company will not have a sight of an accurate forecast of future finances. Therefore the role of both CFO, as well as finance controller, can help the organization to achieve desired results. 

In case you find it difficult to decide if your company needs finance controller or a CFO or both then you should know this-

  • If your company is growing at a good pace and if you need accounting records based on the GAA Principles and your accountant is not able to keep up with all the financial data then you would need the assistance of a finance controller;
  •  however, in case you need someone to assist in your decision making in investments and where you need to have financial forecasts for your company and you are going through a transition, then you should consider hiring a Chief Financial Officer.

How are Finance Controllers and CFO related to each other?

While they are separate from each other and each plays a crucial role in making a business successful, the CFO and Finance controller work closely. Without the controller, the CFO may miss out on getting accurate financial data which is required to make decisions. As their analysis and strategy is based on accurate financials, the CFO is responsible for the controller’s performance.

While they play separate roles, a CFO and finance controller work in tandem to realise the vision of the CEO and take the business forward. The controller should know about accounting, GAAP[1] and best practices, whereas the CFO should be having a good understanding of the accounting function and finance and business strategy. 

Therefore in case of some businesses, having a good controller is not enough, they may also require the services of a CFO. Without having the experience of a good CFO, companies miss out on having the strategic and financial planning.

Role of Virtual CFO

The value of a CFO can never be denied, but a company may not be able to afford a full time CFO; here comes the Virtual CFO. VCFO refers to an outsourced service provider providing the same role. Here you need to pay only for the services and time rendered.

However, when hiring a VCFO make sure that they have relevant experience in dealing with the financial issues. Also, call a few references to know their client’s experience.

Conclusion

The need for a CFO and finance controller depends upon the requirements of your Company/organization. As said earlier, while they are separate from each other, each play a crucial role in making a business successful. Therefore as an entrepreneur, you should be aware of the differences between the two.

Read our article:Comparing In-house vs. Virtual CFO Services

Ashish M. Shaji

Ashish M. Shaji has done his graduation in law (BA. LLB) from CCS University. He has keen interests in doing extensive research and writing on legal subjects especially on corporate law. He is a creative thinker and has a great interest in exploring legal subjects.

Business Plan Consultant


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