Should Your Small Business Hire a Contract Controller or CFO?

Many people use Chief Financial Officer (“CFO”) and Controller interchangeably because they think it is the same position. It is quite possible that you’ve seen other businesses with CFOs and controllers who have the exact same responsibilities, but this can make things confusing. So, what is the difference between a contract controller and a contract CFO? Which does my business need? Do we need both?

Contract Controller vs Contract CFO

A contract Controller is responsible for the accounting and record-keeping of an organization. Additional responsibilities can include management of information technologies, insurance, sales tax reporting, federal income tax reporting, outside CPA audits, and human resources. Controllers are in essence responsible for the financial and regulatory compliance of the Company. Think of controllers as the “historians” for the company, the controller “books the past” and continually works with historical information.

Though a CFO is ultimately responsible for the financials of a company, the role of a contract CFO is more encompassing. They will often review the financial statements, but, that is only to get a perspective of past performance. The CFO will take than those numbers and analyze them to improve future performance working closely with operations and management. CFO’s are key in developing and implementing a strategy for the company to achieve its goals.

Things that may require a CFO include forecasting, maintaining debt covenants, mergers, and acquisitions, a deeper analysis of the financial statements, managing capital structure, investors, banks, and/or taking your company public.

Reasons To hire a Part-Time or Contract Controller

There are a number of situations your small business might need some assistance from a contract controller. Many companies even offer part-time assistance if you can’t justify paying someone full-time. We have outlined some situations which may prompt a small business owner to hire a contract controller in Phoenix:

• Supervision of bookkeeper. If the company doesn’t have a CFO and the owner doesn’t have time or can’t monitor bookkeeping, the solution is often a controller. Does Your Business have a Debit Ratio of .04 or higher?

• Accuracy of financial reports. Sometimes bookkeepers aren’t able to identify the root cause of inaccurate numbers or develop a solution to remedy the situation.

• Fixing the period close process and report delivery. It is not uncommon for bookkeepers to have trouble completing the financial close process on time (often in the range of weeks or months). Though many close quarterly or even annually, small businesses should close monthly to take advantage of real-time data.

• Preventing errors, fraud, and security breaches. A bookkeeper does not have the training and skills necessary to implement these kinds of internal controls.

• Ownership of accounting process. As your small business grows, the complexity of accounting processes grows along with it. Bookkeepers are often not experienced enough to take ownership of these processes and make adjustments where needed.

When To Consider a Part-time or Contract CFO

While the role of a Controller puts together all the financials and focuses on the historical transactions, the CFO works with the historical information but uses it as a tool that enables him/her to be a strategic partner to the CEO. Maybe your finance team needs more supervision or maybe your company needs a better financial strategy and direction. A Contract CFO in Phoenix can assist in a number of areas which we have outlined below:

Supervision of finance team. Like any department, the finance staff (eg: bookkeeper and/or controller) requires guidance and oversight. If the owner doesn’t have time or can’t monitor the team’s performance, the best solution is often a CFO.

• Need for sophisticated reporting and interpretation. Numbers can be confusing if not interpreted correctly. It is essential that a small business team truly understands the story behind the numbers in your financial statements. CEOs, controllers, and bookkeepers may not be financially savvy enough to determine which metrics matter most and what those numbers mean. This is typically the “wheelhouse” of the CFO. A top-notch CFO can find and interpret the numbers (such as financial metrics for SaaS companies) and decide which actions to take to leverage them to drive positive impact.

• Financial strategy and direction guidance. Small business owners may need help with a financial strategy such as pricing decisions, long-term projections or strategy formulation/refinement. The CFO becomes part of the executive team and participates in – and often leads – important planning sessions.

Stakeholder report package generation and interaction. Boards, banks, and investors will need to see reliable data packaged in an attractive and useful manner. CFOs are often called on to prepare these materials. Check out our article on how well-designed board meeting packets lead to productive board meetings for more on this subject.

• Fundraising assistance. If the CEO can’t take the lead on building and telling the financial story required in fundraising, a CFO is often asked to join the team to support these efforts and round out the C-level expertise of the company.

Final Thoughts

Many companies opt to hire a Controller when they really need a CFO. These two roles are not interchangeable. Although in the same area of expertise (accounting and finance), these two roles are different. Regardless of whether you are a part-time or contract CFO or Controller in Phoenix, you should strive to be the financial leader in your company.

Limitless Investment & Capital’s Contract Controller & Contract CFO Services in Phoenix

Situations can arise from time to time where extra financial expertise is needed to help with the successful operation of your company. Schedule a free financial analysis today to determine if your small business could benefit from the assistance of a contract controller or contract CFO.

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