Thinking You Need Financial Leadership? Do You Need A CFO, Controller Or Both?

By Jack Perkins, founder at CFO Hub, which provides on-demand CFO, controller, accounting and HR services.

During a business’s infancy, bookkeeping and financial planning are commonly handled by the business owner or an accountant. Either route provides an early-stage solution — but most growing companies eventually surpass a threshold where their exponentially increased accounting and financial management demands render this strategy unfeasible.

Inevitably, there comes a critical juncture where you must hire financial leaders and specialists to take the helm and chart a strategic course as the business ventures into unfamiliar waters.

However, this is where matters become complicated: Should you hire a financial controller, a CFO or both? 

Why Hire A Financial Controller?  

A financial controller is a senior-level finance executive charged with accounting oversight. If a company has a CFO, the financial controller reports to them directly. 

In their role, a controller ensures that financial accounting and reporting are executed accurately, on time and in compliance with legal and regulatory stipulations. Therefore, most of their daily tasks will involve managing the accounting department, enforcing accounting standards and best practices and closing the books. 

But in recent years, the role has evolved beyond that of a lead accountant. When polled, 91% of CFOs and business leaders stated that they want their controller to play a more active role in shaping and enacting strategic priorities. Dynamic, competitive business climates demand that financial controllers must, by necessity, handle a mixture of traditional and strategic responsibilities.

The “Modern Financial Controller”

What does the “modern financial controller” look like, then? 

Deloitte breaks this evolution down into four primary roles.

1. A steward: Manages risk and helps to preserve the company’s assets.

2. An operator: Leads and optimizes the finance and accounting department. 

3. A strategist: Helps influence the company’s financial path. 

4. A catalyst: Executes strategic financial initiatives. 

When navigating the transitional period before hiring a CFO becomes necessary, a financial controller may be a better choice.

When Do You Need A Financial Controller? 

The earliest stage a company might hire a controller (at least part-time) is upon reaching roughly $500,000 annual revenue. However, nearly every business requires a full-time controller after achieving $10 million in annual revenue. 

Do you need a controller? Ask yourself:

• Are we legally obligated to follow generally accepted accounting principles (GAAP) or reduce the potential for errors or fraud?

• Does our CFO need help managing day-to-day cash flow and accounting practices? 

• Do we require more accurate and timely financial statement reporting? 

• Do we anticipate implementing or integrating a new accounting system? 

• Do we want to accelerate the month’s close?

Answering yes to one or more of these questions means it’s likely the right time to hire.

Why Hire A CFO? 

In their crucial role as the company’s financial leader, a CFO manages and monitors the accounting and finance departments while directly overseeing financial forecasting, planning and analysis.

But, once more, the nature of the role is expanding beyond its initial scope. Stricter regulatory requirements, globalization challenges and rapidly evolving technologies and industries have forced CFOs to further incorporate broader perspectives and innovation. As a result, both CFO and financial controller roles have been elevated.

The “Modern CFO”

Today, CFO responsibilities comprise five subcategories.

1. Managing risk: According to surveyed CFOs, besides handling finances, enterprise-wide and operational risk management is the most important task for CFOs (i.e., “How do you make your company less vulnerable in the future?”).

2. Regulatory compliance: The CFO oversees financial reporting and distribution to key stakeholders, employees, regulatory agencies, investors and lenders.

3. Ensuring liquidity: The CFO manages cash flow to ensure financial obligations are met. To that end, they run the treasury group (i.e., oversee accounts payable, accounts receivable and inventory).

4. Raising capital: Few businesses scale organically without external capital injections. CFOs must pursue critical capital raising and fundraising support, discerning best-fits.     

5. Driving ROI: The CFO’s ultimate job is to help the company maximize returns on assets and capital — leveraging financial forecasting and data analysis to guide decision-making. 

When Do You Need A CFO? 

A Lancor study found, on average, first-time CFO hires occur upon reaching the following: 

• 100 employees.

• $25 million in annual revenue.

• 111% year-over-year revenue growth.

Aside from those numbers, how do you determine whether your company needs a CFO?

• Do you need to perform an infrastructure build-out?

• Are you expanding internationally?

• Are you preparing for an IPO? 

• Do you require strategic financial guidance as you scale? 

• Does the company require financing? 

If you satisfy the metrics or questions above, odds are, you’re ready to hire a CFO. 

The Right CFO Or Financial Controller Hire Is Crucial

Many businesses will never reach their full potential because they fail to or mistime hiring the right strategic positions. After identifying their necessity, hiring a CFO or financial controller requires patience and prudence to ensure their expertise provides the best fit for current operations and future goals.

First, take the time to analyze your company’s capabilities and requirements. Then, after establishing that this pressing need does exist, you must act deliberately — and, remember, you’re not merely hiring for today’s challenges, but also tomorrow’s.

With the right CFO and controller at the tiller, that future becomes much less uncertain.