Controller or CFO – Which Do You Need?

Business leaders asking themselves the question “Do I need a CFO or Controller?” are typically in a good position – one where growth has necessitated that they bring in financial leadership. 

A split screen between an accountant and an accounting executive

At this stage, companies are feeling the limitations of their existing accounting personnel and are evaluating what their next move should be to keep the company moving forward. But knowing whether to hire a Controller or a CFO is a big decision, because, contrary to popular opinion, the roles are distinctly different.

As Kevin Briscoe, the CEO of CFO Selections, explains in nonprofit leadership podcast, “A Controller is ‘walls-in and rear-facing’ and a CFO is ‘walls-out and forward-facing’.” He goes on to explain that a controller analyzes what the company has done already while a CFO evaluates where the company is going next.

A CFO will bring a unique skillset to the table and be equipped to manage different objectives than a Controller, but that is not to say that a CFO is necessarily the better choice for your specific circumstances.

So, should you hire a Controller or a CFO? Use this guide to find the right fit for your organization:

What Does a Controller Do?
At its most basic description, a Controller is the head of accountant at a company – overseeing all accounting-related activities. An individual in this senior-level role will:

• Prepare financial reports
• Oversee budgeting
• Improve financial close processes
• Supervise audits
• Maintain internal controls
• Support lower-level accounting staff
• Maintain financial compliance

Controllers look for ways to improve the accuracy and efficiency of accounting operations to benefit the company’s bottom line. In organizations where there is no CFO, a Controller may also analyze financial data to inform strategic financial decisions. Additionally, in some instances a Controller may help determine which software is utilized by the accounting and finance teams.

What Does a CFO Do?
A Chief Financial Officer looks at where the company is going and what it needs to know to get it there. CFOs are focused on what is coming next and how to achieve business goals related to growth and profitability.

An individual in this executive-level role oversees all accounting and finance-related activities. In companies that have both a CFO and a Controller, the Controller will roll up under the CFO, typically as a direct report. A CFO will also:

• Manage cash flow
• Oversee FP&A (Financial Planning and Analysis)
• Ensure financial reporting accuracy and timeliness
• Set the strategic financial direction for the company
• Work to secure funding
• Advise on financing initiatives
• Liaise with stakeholders
• Support lower-level accounting and finance staff

Technology usage within accounting and finance teams (as well as their adjacent departments) will also fall under the purview of the CFO. An experienced CFO will advise on which software and technology integrations should be utilized as well as oversee their implementation and ongoing usage.

CFOs will also lend their expertise to the HR department on a variety of other financially related topics like hiring personnel, selecting benefits packages, and determining compensation.

What is the Difference?
While these differences may sound clear but on paper, but in practice they can get hazy. The roles can (and do) overlap significantly, especially at smaller companies where there is either a Controller role or a CFO role, but not both.

Part of the confusion comes from the ability for a Controller role to be played up or down depending on the company’s needs.

In organizations where there is a CFO role with a well-qualified individual in the position, the Controller role can be downplayed into more of a “Head Senior Accountant” or “VP of Accounting” role. In this version of the role, a Controller will be strictly a “numbers person” – ensuring the integrity of the data and meeting key business deliverables without any significant data analysis or strategic planning included.

In organizations where a Controller is the most senior level financial professional, the role can be played up into a quasi-executive role. In this version of the role, the individual will aid in advising the CEO/business owner on broader financial matters, forecasting, analyzing data, and setting strategy at least to some degree.

The flexibility of the Controller role is one reason why so many business professionals use them interchangeably. However, it is important to remember that each role is created to achieve a different objective.

Hiring a Controller or CFO
While any company of any size can hire a Controller and/or CFO, smaller companies are more likely to have a Controller if they are only going to have one of these roles. By $1MM in revenue an organization will almost certainly have hired a full-time Controller, whereas this is typically the lowest threshold for hiring a CFO.

However, as the company grows, there is not necessarily a need to switch from a Controller to a CFO role at any set revenue value. A Controller can benefit a $5MM, $10MM, or $20MM organization in the same way as a $1MM organization, although their salary expectations will likely increase along the way because the job will get more complex as the accounting functions get more sophisticated.

While companies with $1MM or more in revenue will likely have a need for a CFO, this role can look very different based on the size, business type, and specific needs of the organization. Some businesses may choose to outsource their CFO function until they have the need for a dedicated CFO role. A fractional CFO can fill the role on a less-than-full-time basis until the company grows enough to need a full-time hire.

In some industries, a CFO may be required earlier to obtain funding in anticipation of rapid growth, meaning that a CFO is hired before there is “a need for one.” This is most common with tech startups, although it can apply in other circumstances as well.

Salary Comparisons
According to Payscale’s small business salary data, a Controller’s median base salary is around $88K while  a CFO’s median base salary is around $143K, independent of equity, retirement accounts, and non-cash benefits. While compensation for both roles will vary based on geography and industry, as well as whether the company is private or public, these figures give a sense of the compensation differences between both roles.

Larger companies as well as those with more complicated needs will need to offer a bigger compensation package to get the right candidate into the role because as the revenue of the organization increases, the more work is needed to manage its financials. For instance, a CFO Magazine compensation study reveals that private companies with revenue under $20MM in size have an average CFO cash compensation of around $195K (compared to $238K for companies with $21-99MM in revenue and $285K for companies with $100-499MM in revenue). Additionally, the recruiting process may be more costly when hiring a CFO than a controller, increasing their on-boarding cost.

Advice: Hire Now!
Our partners at CFO Selections have a great resource on how to choose between a controller and a CFO for your business, but they offer an important caution,

Every company needs a financial leader. Depending on the size of your business and its stage of life, the role you choose for that leader might be a controller, CFO, or both. The clarity we provided above can help you make the right choice, but taking action is vital. Don’t wait until you have unchecked growth or are ready to investigate an IPO before getting a financed-minded person on your team to help guide strategic decisions.

Remember, it is never too early to start planning strategically for future growth. If you are looking to hire a controller, please reach out to our recruiting team. We specialize in placing qualified accounting and finance professionals into roles that meet their experience-level and career goals. Let us put the ASP Team difference to work to find you the right controller for the job!  

Originally published: 10/4/2021
Updated with current salary figures and modified: 12/12/2022