So, what does a controller do? Understanding the role of a controller is essential in all businesses as it ensures that the company's financial affairs are in order and that all regulatory obligations are met. However, many small and medium-sized enterprises lack the funding to employ a controller full-time. The good news is that hiring a fractional controller will enable you to get the knowledge and experience you require when you need it.
A fractional controller performs all the same tasks as a full-time controller but only on a part-time or an as-needed basis. They oversee the company's ongoing financial operations and typically answer to the CFO. With a fractional controller, you can change the composition of your management or finance team as your company's needs change for a much lower cost than employing a full-time controller.
In this article, we will look at some of the roles of a controller, how they differ from accountants and CFOs, and the qualifications you should look for when hiring one. Let's dive in.
Fractional Controllers and Financial Reporting
Bringing on a fractional controller is a game changer for how you do your financial reporting. For starters, the fractional controller is in charge of maintaining accounting records and creating financial analysis reports. They'll ensure that you receive these reports promptly, comply with generally accepted accounting standards (GAAP), and accurately reflect the company's financial performance.
Additionally, the fractional controller maintains accounting records and in most cases, they determine the best way and place to preserve them. They, in some cases, also manage all personnel working on accounts receivable, accounts payable, payroll, inventory, and compliance.
If your business has subsidiaries, the fractional controller will be responsible for managing their accounting procedures and ensuring that their reporting and control frameworks adhere to the rules established by the primary company.
Fractional Controllers and Budgeting
Fractional controllers significantly impact how business budgets are created and how well spending is managed in relation to anticipated earnings. They are responsible for:
- Ensuring that debt is appropriately serviced
- The business pays its accounts payable on schedule
- Ensuring that company budgets make sense for short and long term goals.
Financial forecasting is also an essential component of work for many fractional controllers. It is necessary to accurately predict how much money will be coming in during the same period to create a budget that allocates spending in the most advantageous way. To achieve this, a fractional controller will:
- Collaborate with other knowledgeable individuals in the finance team
- Extrapolate internal and external financial data (past and present)
- Produce the most precise expense and revenue estimates
Fractional Controllers’ Role in Risk Management
A fractional controller's personality as a strategist often manifests itself when it comes to risk assessment and management. They do not take on this role alone, and will often work with the leadership team to evaluate the present state of the company. This way, they'll have a clearer picture of what needs to be changed or managed.
Part of their role in risk management is to:
- Evaluate risks: Your fractional controller will thoroughly analyze and evaluate possible hazard points within your business and determine if they are worth taking for the good of the company.
- Financial Analysis: Risk management is almost 90% financial analysis. Your fractional controller will use the present financial status and past events to decide how to manage risk. They'll also use the financial expertise and advice of accountants and analysts regarding sustainability and profitability.
- Mitigate Fraud: Your fractional controller will work with the rest of the accounting team to review transaction records to ensure no unapproved or fraudulent purchases (due to internal or external factors) occur, and check company assets to ensure they are present and in tandem with company budgets.
Controller vs Accountant: What's the Difference?
Both the roles of a controller and an accountant are closely related. However, the most significant distinction is the degree of financial oversight controllers give their companies. An accountant is in charge of creating financial reports and assessing the business's financial performance. On the other hand, a controller is in charge of the accounting division and supervises the creation of financial reports and manages the company's cash flow.
Controller vs Chief Financial Officer
A Chief Financial Officer is a strategic leader in charge of all various financial activities, including financial forecasting and analysis. They frequently participate in higher-level financial planning and strategy. A CFO keeps tabs on the business's capital and growth, analyzes its strengths and weaknesses, and creates a strategy for improvement.
In contrast, a financial controller is more of a tactical leader, responsible for compliance and reporting. They provide financial reports, including balance sheets and income statements. They also keep an eye on internal controls, manage compliance audits, help with budgeting, and to some extent, analyze financial data.
A Fractional Controller's Qualifications
When hiring a fractional controller, you should always look for someone who can handle the many responsibilities of your finance department. Ideally, this person will have:
- Bachelor's degree or higher in accounting, business finance, business operations, or a related subject.
- Certified Public Accountant (CPA) certification.
- Knowledge of income tax.
- Strong technical skills.
- Excellent interpersonal skills and effective oral and written communication skills.
- Ability to multi-task and work independently with minimal supervision.
- Willingness to be a team player and maintain professional working relations with other staff.
Experience
No industry standard specifies how much job experience a controller must have. However, when hiring one, you should look for at least 5-10 years of professional experience to find the best fit. If you run a small business, look for a candidate with previous experience in public accounting.
Work With a Fractional Controller at Dillon Business Advisors
Small businesses and professional firms no longer have to try to operate without financial expertise just because of their size. Fractional financial teams made up of a CFO, Controller, and CSM, can help your office set up excellent processes for daily business and long-term growth. At Dillon Business Advisors, we offer fractional services that provide the cornerstone for your financial operations. Contact us today for a free financial business analysis.
