Financial controllers are a varied group of accounting professionals. Mostly CPAs with astaunch regard for accuracy, process and policy, controllers’ responsibilities canvarygreatly depending on the size of the organization and industry. Universally, a financialcontroller is a company’s lead accountant, responsible for accurate financialstatements andefficient accounting processes.
Beyond that, however, the job can be quite diverse.
What Is a Financial Controller?
A financial controller is a senior-level manager who oversees a business's day-to-dayfinancial operations. Sometimes called the “company historian,” financial controllers run the accounting function andare responsible for the company’s books and records.
The role of the financial controller varies with the size of the business. Controllers insmall companies, whether internal or contractors, are mostly involved in detailed accountingtasks that are beyond the skills of the company’s bookkeepers. In midsize enterprises—where responsibilities are broadest — financial controller duties are likely toincludeproject management, technology, insurance and compliance functions. In large enterprises,financial controllers work with chief financial officers (CFOs), chief accounting officers(CAOs), finance managers and treasurers to control the finance and administration function.
Key Takeaways
- Financial controllers are senior managers who oversee a business’s day-to-dayfinancialoperations.
- As the lead accountant in a company, financial controllers’ education, experienceandlicensing are concentrated in finance, accounting or economics.
- Most of a controller’s time is spent on traditional duties such as closing thebooks andregulatory compliance, balanced by supporting company strategy, together with the CFO.
- Staying current on finance technology helps a controller be successful.
Understanding Financial Controllers
In the simplest terms, financial controllers are senior managers charged with producingaccurate books and records for a company. To do this, they must understand the operations ofthe business and the underlying relationships between inputs, outputs and the processes thatsupport them. A financial controller’s role begins with being “the numbersperson” andextends to creating reports and analyses that support strategic business decisions.
A financial controller’s mindset is geared toward accuracy, stewardship, policy andethics.Sometimes, it’s a thankless job. More often, controllers derive extreme satisfactionfromdeveloping the data that guides strategic decision-making — despite feeling challengedby alack of resources. A recent Institute of Management Accountants (IMA) study highlights an associated gap: Financial controllers feel theyspend too much of their time on stewardship at the expense of strategy.
Why Are Financial Controllers Important?
Financial controllership is a highly technical role; practitioners need to be both experts inall matters of accounting and compliance and relatable leaders who makes the entireorganization want to follow policies and procedures.
It’s this combination of hard and soft skills that make financial controllers soimportant tobusinesses.
A high level of pride-of-ownership in the accuracy and timeliness of the company’sbooks,combined with four-star ethics, are necessary characteristics of successful controllers. Inother words, it’s important to successful controllers that their resultant financialdata beright — and they’ll stop at nothing to make it so — because it must betrusted by seniorexecutives. Critical business decisions will be based on it.
What Is the Difference Between a CFO and a Controller?
An organization’s size influences the roles of a financial controller and a CFO. Insmallerorganizations with both a CEO and financial controller, these leaders share responsibilityfor all facets of the company’s financial processes.
Financial controllers and CFOs in the same company begin to have a separation of duties whenrevenue reaches $35 million to $50 million, or when a company starts contemplating complexfinancial market transactions. When this happens, the CFO generally takes on anexternal-facing role, working with financial markets, mergers and acquisitions, whilefinancial controllers take ownership of the internal processes of generating accurate andtimely financial statements.
Another difference between the CFO and financial controller is that the CFO’sresponsibilities span all financial activity, such as budget forecasting, treasury andworking with investors and the board of directors, while a financial controller focuses onledgers, internal controls, systems and expense management.
When Does a Company Need a Controller?
As a small business grows, its owner may start to spend too much time working on theaccounting books rather than conducting business. Often, there is a bookkeeper or accountantalready on board or on contract, but that person eventually becomes unable to support allthe financial data needs of the business owner and outside stakeholders.
Three common scenarios that lead to a company hiring its firstcontroller are:
Growth: When a business outgrows the abilities or available time ofits bookkeepers, it’s time to hire a controller. Adding a financial controllerhelpsa growing company execute complex accounting transactions, reduces the time neededto close the books and enforces internal controls and company policies. This is notto undervalue bookkeepers, but financial controllers possess the education, trainingand experience needed to handle duties like liaising with external auditors and taxprofessionals and guarding against fraud.
Revenue: A general rule of thumb is that companies with more than $5million in revenue are ready for — and require the expertise of — afinancialcontroller.
GAAP compliance: Regardless of revenue size, most financialcontrollers are hired when a company needs to generate financial statements inaccordance with GAAP to meet the requirements of bankers or investors or, in thecase of a startup, venture capitalists.
Required Skills for Financial Controllers
Successful financial controllers see the financial forest and every tree within it. They workat a detailed level, understanding every nuance of the accounting process and thetransactional data in the general ledger, financial statements and compliance documents. Atthe same time, they must be strategic thinkers who help the company achieve its short- andlong-term goals. These skills might seem contradictory, so they usually must be honed overmany years of experience — a typical requirement for most financial controllers.
Of course, a knack for numbers and a sense for business relationships are also significantassets.
Additionally, financial controllers need excellent communication and interpersonal skills.The financial controller is the face of the accounting function to other departments in thecompany, educating non-financial people and enforcing company policies in a collaborative,rather than adversarial, way. These skills also enhance their ability to hire and managewell-run, productive teams.
Does a Controller Need a CPA?
There is no regulatory requirement that a financial controller needs to be a certified publicaccountant; however, gaining a CPA certification is the most common way to master theaccounting acumen required by the position. The CPA certification has rigorous educational,testing and field experience criteria for initial licensure, as well as an annual continuingprofessional education (CPE) requirement.
The CPA curriculum focuses on accounting, business law, tax and auditing. Alternativecertifications commonly found among financial controllers are chartered managementaccountant (CMA), chartered financial analyst (CFA) and chartered financial controller(CFC).
Is Financial Controller an Executive Role?
Traditionally, the financial controller is an executive role in small companies, givenit’slikely their highest-level finance position. As organizations increase in size, thecontroller may be a senior manager reporting to the CFO or CEO.
Modern financial controllers are often tasked with being a strategist and catalyst forprogress within their companies. This is slowly shifting their focus away from traditionalfunctions, like closing the books and complying with accounting standards, according torecent studies. More and more, financial controllers are asked to step out of their“numbers” box and engage in strategic discussions. Financial controllers withunder-resourced departments or inadequate financial systems may find it difficult to meetthis challenge.
What Does a Financial Controller Do?
Most of what a financial controller does falls into one of four categories, referred to asthe “Four Faces of Controllership” by the IMA. They are stewardship, operator,catalyst andstrategy.
Among these categories, stewardship and operator take up most of a financialcontroller’stime, while the catalyst and strategy duties together comprise about 30% of acontroller’sfocus. The responsibilities in each “face” include:
Stewardship: Protects and conserves a business’s resources andaccurately reports on its financial position.
Operator: Manages the finance organization efficiently.
Catalyst: Provides the right information at the right time tosupport business execution.
Strategy: Supports executives moving the company toward its missionand goals with financial information and analysis.
This bar shows an approximation of how a controller’s time is typically apportionedamong thefour categories.
The Four Faces of Controllership
| Stewardship | Operator | Catalyst | Strategy |
|---|
What Are the Duties of a Financial Controller?
Their primary responsibility is closing the company’s books in an accurate, timely andefficient way. Ultimately, they provide general accounting oversight and are the owners ofthe financial close process.
This incorporates many duties, which may vary by company but generally include:
Approving invoices: Ensuring invoices are properly approved andcoded in the general ledger.
Cash flow management: Monitoring and balancing cash flows into andout of a business to meet obligations and optimize investment.
Audit liaison: Coordinating with external financial, compliance andtax auditors.
Internal controls: Creating and monitoring company policies andinternal controls, especially spending controls, to safeguard company assets andreduce fraud.
Budget: Assisting or fully creating the budget, includingincorporating historical data.
Debt management: Administering loan agreements for companyborrowings and collecting moneys owed to the company from customers.
Financial strategy: Developing financial strategy, including riskminimization plans and opportunity forecasting.
Compliance: Ensuring compliance with local law, tax provisions andrelevant industry and financial regulations.
Reporting and analysis: Providing financial reporting and analysisto guide decision-making.
Cost savings: Identifying efficiencies and opportunities for costreductions across the business.
Leadership: Mentoring and managing the accounting and financialstaff.
Payroll: Handling payroll processing and labor tax compliance.
External reporting: Preparing company tax and financial statements,including public filings with the Securities and Exchange Commission (SEC).
Banking: Setting up bank accounts and managing bankingrelationships.
Stakeholder management: Advising company managers on operationsactivities based on knowledge of the underlying business.
3 Steps to Becoming a Financial Controller
Job prospects for financial controllers are promising, according to the U.S. Bureau of Labor,with growth expected to outpace the overall average for all occupations. For thoseinterested in pursuing this career, there are many paths to becoming a financial controller.
The key steps to becoming a financial controller are:
Earn a relevant college degree(s): Earn a bachelor’s degreewith amajor in accounting, finance or business administration. If pursuing a CPA license,most states require at least 30 more credits above most bachelor’s degrees.Increasingly, companies are requiring master’s degrees for their controllers.
Gain work experience: Most controllers have five to 10 years ofexperience in financial roles. A common progression is staff accountant or costaccountant, to accounting manager, to assistant controller and, ultimately,controller. Often, work experience in public accounting, especially at one of the“Big Four” firms, is viewed as an important plus.
Pursue licensure: Fulfill the requirements of a professionallicense, such as CPA, CMA, CFA or CFC. Traditionally, the CPA license has beenconsidered the gold standard. It’s also important to maintain the continuingprofessional education necessary to keep licenses in good standing and stay currentin the industry.
Studies show that nearly 50% of controllers hope to be CFOs someday, but fully half seefinancial controllership as their career pinnacle.
Tools for Financial Controllers
At one time, financial controllers were expected to be spreadsheet wizards. Accounting andfinancial software have evolved, and they are now expected to be experts at all theircompany’s financial systems. Often, financial controllers lead the selection of thesesystems and are the key business owner once they are implemented. As a result, financialcontrollers are power users of the following tools:
Finance and accounting systems: This is the core technology for financialcontrollers — the “books” include the general ledger, subledgers, journalentries and anasset register, among others.
Global consolidation software: These systems merge the individual financesof different divisions and business units, including those that are geographicallydispersed.
Financial reporting solutions: Financial reporting tools generate companyfinancial statements and support modeling and analysis.
Inventory, payroll, billing and compliance systems: Financial controllersrequire access to aspects of all these systems, though they don’t typically overseethemall.
Technology is a critical tool for successfully meeting the “control” aspects ofthecontroller’s job. Further, leveraging technology, especially emerging tech such asroboticsprocess automation, in-memory computing and machine learning, can ease the challengecontrollers face in balancing traditional and strategic responsibilities. It’s likelythat afinancial controller has several open browser tabs at all times, including an automateddashboard, enterprise resource planning (ERP) system — and, of course, modern accounting software.
Financial controllers are the lead accountants in a business, responsible for acompany’sbooks and records and for providing accurate and timely financial information. They arewell-educated, experienced professionals who are most successful when they also possessexcellent “soft skills” for managing their teams and collaborating across thecompany.
The financial controller role is evolving to be more strategic, with these professionalsworking hand-in-hand with C-suite executives. Additionally, financial controllers areincreasingly involved in their companies’ technology decisions, which affectcontrollers’most important tools.
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Financial Controller FAQs
What are the duties of a financial controller?
Financial controllers are primarily responsible for providing accurate and timely companyrecords by managing the accounting function. Duties include owning the financial closeprocess and producing financial statements and reports to guide decision-making.
Is financial controller higher than finance manager?
Finance manager is a title that takes on many different roles within an organization. Mosttimes, these responsibilities are limited and therefore might be viewed as below that of afinancial controller, who has expansive responsibility for the entire accounting process. Incases where the finance manager works closelywith a CFO, the finance manager position may be more senior than the financialcontroller.
What does a financial controller earn?
Earnings for financial controllers depend on the size of the company, the industry, whetherthe company is public or private, the number of staff supervised and where the position islocated. Median annual salaries range from $90,000 to $110,000 per year, according tovarious studies.
