Key Differences Between CFO and Controller - Chief Financial Officer VS Controller

Key Differences Between CFO and Controller - Chief Financial Officer VS Controller

CHIEF FINANCIAL OFFICER (CFO)

A chief financial officer (CFO) is a senior-level executive whose key role is to manage the financial responsibilities of a company. The primary duties of the CFO include cash tracking and financial planning of the organization. CFO also examines their company’s financial strengths and defects and discovers the corrective measures to improve the financial stability of the company.

CFO should have a good reputation in cost management, corporate finance strategy, accounting standards, and reporting requirements. They are in fact in charge of Human Resource(HR), Information Technology(IT), and Enterprise Risk Management(ERM).

AUTHORITATIVE CFO

A CFO possesses the following authority in the company management and leadership level.

  • The CFO of a multinational organization will be the top-positioned financial controller. They’ll handle financial related plans and interior and exterior cash flow of the company.

  • The position of a CFO can be productive but there are many legal formalities that they must be strictly liable to.

  • CFO is also responsible for supervising the taxation issues for their organization.

  • Usually, a CFO is the top third-ranked executive in a company, who plays an authoritative role in their company's strategic drive.

FUNCTIONALITIES OF CFO

The CFO directly reports to the chief executive officer (CEO) of the company but has significant power in the company's financial investments, financial decision-making, capital structure, and management of the company’s income and expenses. The CFO works along with other senior managers in all departments and plays a vital role in the long-term success of the organization.

The future financial processing techniques are foreseen by the Chief Financial Officer of the company.

For example, if the marketing department likes to release a new campaign, the CFO may assist them to check the campaign stability and arrange for the funding facilities for the campaign.

Here comes an important point to note, In the financial industry concerned, the Chief Financial Officer is the top-ranking financial designated authority within a company.

The top third-ranked executive of a company called CFO even has the right to assist the company CEO with financial forecasting and cost-benefit analysis. A CFO can also become a future CEO, chief operating officer, and also reach the top-notch position, the president of a company.

THE REWARDS TO BE A CFO

The CFO role focuses on business planning compliance and quality control processes, and hence they are the judicious partner to the CEO. The CFO always concentrates to play a vital role in accelerating the company’s financial strategy.

The CFO’s reporting information must always be accurate and trustworthy because many decisions are brought to the public based on the data they submit.

To the peak, The State and Federal governments have the privilege to hire CFOs to supervise taxation issues. Generally, the CFO collaborates with the local dwellers and elected officials on bookkeeping and other expense-related matters. The CFO is the right person in the organization to set financial policy and they are predominantly responsible for managing government funds.

NEED OF A CFO

The CFO is hired to perform the below listed dedicated tasks for the organization.

  • Finance team overall supervision

  • Delicate reporting

  • Financial strategic decision making

  • Fundraising support

NOTE: A Multinational organization with more than 1 Million dollar revenue will hire a CFO to deal with its financial practice. Sometimes $800K business dealers also hire part-time CFOs.

CONTROLLER OR FINANCIAL CONTROLLER

A financial controller can be simply called a company’s lead accountant.

A controller is a person who is responsible for all accounting processes, including high-level accounting and managerial accounting within a company. Now, this financial controller usually reports to the chief financial officer (CFO). The controller's primary duty is preparing the operating budgets, administering financial reporting, and performing payroll related duties.

Secondly, The controller is also filled with budget tasks which include budget planning and preparation and organizing prime budgeting schedules for the entire organization. This necessarily includes 3 main tasks namely the collection, analysis, and consolidation of financial data. The controller doesn't maintain the annual budget Instead the controller position monitors variances, summarizes trends, and investigates budget deficiencies.

The other main role of a Controller is to report the management about the Material Budgeting variances.

FUNCTIONALITIES OF CONTROLLERS

Controllers' functionalities vary from company to company depending on the size and complexity of the business. This variation in the controller position is termed as a comptroller. Typically, A comptroller is the most senior designation in the company that is commonly found in government or nonprofit organizations. Note that the smaller companies require more versatility of the controller, whereas the larger companies perform the following job responsibilities collaborating with other employees, including the chief financial officer and treasurer.

NOTABLE AUTHORITIES OF A CONTROLLER

A Controller, as an individual is responsible for maintaining a financially healthier organization. CFO takes any financial business related input from the controller. In other words, they support CFO technically.

The controller of an organization may also participate in few other business-related activities like recruiting and providing knowledge training(KT) to staff. They also support management by performing tasks like appraising job results, leading employees, and conducting disciplinary actions as required for the situation.

QUALIFICATIONS OF A CONTROLLER

HR’s while recruiting a candidate for a controller position, expect them to be well experienced in (at least 8 years) direct accounting or finance tasks. Usually, the candidate must hold a bachelor’s degree in accounting, finance, or business administration whereas a master’s degree is sometimes preferred as per the company needs.

Professional training certificates, which include the certified public accountant license are typically preferred.

REWARDS TO BE A CONTROLLER

To ensure proper reporting standards the Controllers often work along with external auditors. Additionally, the controller enforces complete internal control over financial reporting and monitoring. Public Controllers usually work on financial filings and report to the government.

The controller of a business deals with legislation affairs that positively impact taxation and operations. They also monitor future risks and ensure proper permits and licenses are met for the same. Apart from filing financial reports, the controller is also assigned with tax preparation duties which include filings for state taxes and industry taxes.

Overall, a Controller is an All-rounder in the financial department who ensures healthy financial stability within the organization.

CONCLUSION

A well experienced and potentially fit CFO and Controllers earn as per their capabilities (Payscale differs as per geographic location). More or less they both support the financial needs of their esteemed organization where their financial support stands as a backbone for a streamlined business. They both are rewarding designations too that possess a regularized communication with the management. Hope, Calman Analytics clearly stated both the domains in the financial industry. We bring the CFO vs Financial controller article to an end by picturizing the notable rewarding differences in both.

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