Even though your business may be rapidly expanding, it can be challenging to structure its financial infrastructure. You'll often have a dilemma over who to hire and who to hold off for a while. Should you hire a financial controller or an accountant? Should you hire both at the same time or hire one to head the whole financial department?
The truth is you'll be better off with both of them in your corner. Still, many business leaders find it hard to distinguish between a controller and an accountant. Controllers and accountants have a tight relationship. However, the fundamental distinction between the two professions is the amount of supervision controllers give to the organizations in which they work.
In this article, we will help you understand and distinguish the roles of a controller and an accountant and how each of them will help you achieve the goals you've set for your business. Let's dive in.
The Role of the Accountant
Compared to controllers, accountants handle easier accounting chores, including:
- Interpreting financial records: The role of an accountant is vital in keeping meticulous records of financial transactions. These records help determine the net profit or loss for an accounting period and the financial standing of a business as of a specific date.
The business must keep accurate books of accounts in accordance with the accounting principles it follows and the legal requirements. The entity's books of accounts also aid in the operation's future planning.
- Financial accounting: Accountants' duties in financial accounting include examining financial records and processes, comparing bank statements, and computing tax bills and rebates. These duties typically call for prior bookkeeping expertise and a keen eye for mathematical errors.
Ultimately, this will give you precise quantitative data about your company's financial status, liquidity, and cash flows while ensuring that the company complies with all applicable tax laws.
The Role of the Controller
Controllers are responsible for various tasks that all operate under the scope of supervising the accounting department. Controllers may establish accounting policies for small businesses or serve as an administrator at larger businesses. No matter the size of the business, controllers serve as the principal accounting officers, supervising accounting staff and ensuring that the accounting processes for their particular companies run properly. Some of their responsibilities are:
- Ensuring Tax Compliance: This entails being aware of the law requirements for external reporting, making sure the necessary resources are available to achieve those requirements and monitoring the payment of taxes in an accurate and timely manner.
Additionally, controllers may meet with the external audit team to ensure tax compliance, listen to their findings, adopt reporting adjustments, and communicate the audit's findings to senior executives or the board of directors.
- Creating Financial Statements/Reports: This entails being informed of recent modifications to financial reporting standards, managing a workforce that directly contributes to the creation of financial statements, and occasionally attesting that the financial reports and statements have been prepared truthfully to the best of their knowledge.
- Data Analytics: The duties of a controller include interpreting financial data, transforming it into something more usable, offering direction, and implementing change. For instance, the controller might use the data to create and update a financial forecast that allows them to determine whether the company has enough cash to fund its operations and its market share expansion. They can then analyze this prognosis and offer wise counsel to executives of the organization.
Hiring Based on Your Business Goals
You should be happy when you find yourself debating between hiring an accountant or a controller. Why? It signifies your company has expanded to a new revenue level, and you need to reevaluate how you're managing your finances. However, you must establish your goals before deciding if your company requires a controller or an accountant.
Growth
When you find that your company's bookkeepers' abilities or available time cannot keep up with the growth, you'll know it's time to recruit a controller. By hiring a financial controller, your growing business can more easily complete complicated accounting operations, speed up bookkeeping, and enforce internal controls and corporate guidelines.
This is not meant to diminish the usefulness of bookkeepers, but financial controllers are better equipped than bookkeepers to undertake responsibilities like coordinating with external auditors and tax experts and preventing fraud. They also have the education, training, and experience to do so.
Revenue
When your company is making a profit, an accountant may assist you in managing your accounts and taxes to ensure your transactions are appropriately recorded. This way, it is simpler for stakeholders to comprehend your company's success.
On the other hand, if your business generates more than $5 million in annual revenue, you are prepared for and need the skills of a full-time controller. It makes sense to hire a full-time controller at this point in the business development so that they can manage your bookkeepers and accountants while reporting to the CEO.
Reporting Needs
Irrespective of income volume, most financial controllers are employed when a business needs to produce GAAP-compliant financial statements to satisfy bankers, investors, or, in the case of startups, private investors. Report types could include cost reports, inventory reports, budget versus actual numbers, etc. These reports are intended for internal users with company clearance or for company employees only.
So, Which Role Is Better?
While the duties of a Controller and an Accountant differ, both are concerned with using numbers to forward the objectives of your business. Both have advantages and depend on one another to succeed. It is crucial to know which position you can outsource or if you'll require it internally.
Adding a fractional team of 3 executives will assist you in covering all the financial areas of your company's operations. This will allow you to spend much less time administering payroll or reconciling finances and gaining the information you need to make future strategic decisions.
Find the Financial Support You Need With Dillon Business Advisors
At Dillon Business Advisors, we match businesses with a team of financial advisors who take on the roles of CFO, Controller, and Client Service Manager on a part-time basis that fits your business’s needs, budget, and goals. You can focus on your business’s operations and gain trusted financial partners. Contact us today to start a business analysis.
