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Glossary » Financial Controller

Financial Controller

Every organization needs someone responsible for its day-to-day financial operations. Whether it is a government agency, an enterprise company, or an SMB, the overall financial health of that organization depends upon the oversight and implementation of its financial controller.

What is a Financial Controller?

A financial controller is a professional who oversees the daily financial operations of an organization.

These include:

  • Budgeting
  • Cash flow management
  • Treasury operations
  • Accounting
  • Revenue management
  • Expense tracking
  • Financial reporting
  • Risk management
  • Tax planning and compliance (e.g., ASC 606, IFRS, US GAAP)
  • Accounting team oversight

The financial controller is typically the highest-ranking accounting professional in the organization and is responsible for setting financial policies, procedures, and standards that are followed throughout the organization. 

They report to the company’s CFO (if it has one) or its CEO.

Financial controllers are important because they help ensure an organization’s financial health by overseeing budgets, managing cash flow, tracking expenses, and preparing financial statements. 

They also advise on strategic investments and future growth opportunities. By ensuring that the finances of an organization are managed in a timely and accurate manner, financial controllers help to ensure the overall success of the organization.

Synonyms

  • Financial Manager – A professional who oversees the day-to-day financial operations of an organization and ensures that they are in compliance with regulations.
  • Financial Analyst – A financial professional responsible for researching, analyzing, and interpreting financial data to inform business decisions.
  • Chief Financial Officer (CFO) – The chief financial officer (CFO) is the highest-ranking financial professional in an organization and is responsible for overseeing all of its financial operations, including strategy, budgeting, and investments.
  • Treasurer – A specialist who manages all financial transactions and cash flow within an organization.
  • Tax Manager – The individual responsible for overseeing an organization’s tax planning and compliance.

Why Financial Controllers are Important

Financial controllers are essential for the success of any business. They ensure that resources are used efficiently and effectively and that financial reports accurately reflect the company’s health.

1. Controllers ensure that financial statements are properly prepared

Revenue recognition, asset valuation, and payment reconciliations are just a few critical components of financial statements that controllers must ensure are accurate. 

To avoid costly mistakes, controllers must understand the complexities of financial reporting and make sure that all reports comply with Generally Accepted Accounting Principles (GAAP).

2. They manage budgets and identify cost-saving opportunities

Financial controllers are responsible for ensuring that budgets are adhered to and that expenses don’t exceed revenues. They also constantly look for areas where costs can be reduced and efficiencies can be improved.

3. They provide financial guidance and analysis to leadership

Controllers are often relied upon to prepare financial forecasts, analyze investments, assess risks, and help set the overall financial strategy of the organization. 

Leadership can use these insights to make business decisions, communicate with investors and stakeholders, and ensure the long-term success of the organization.

4. They help ensure compliance with relevant laws and regulations

The burden on corporate entities to comply with tax regulations is over $60 billion, according to estimates. Without the expertise of a financial controller, organizations may be at risk of tax penalties and other costly mistakes.

What is the Difference Between a CFO and a Financial Controller?

A CFO and a financial controller share many similarities—they both oversee the financial operations of an organization and provide financial guidance. 

They also play significant roles in future planning of an organization.

However, there are a few key differences between them:

  • The CFO is responsible for setting the overall financial strategy, while the controller focuses on managing more specific aspects of financial operations.
  • The CFO is more involved in decision-making than a controller, and reports directly to the CEO or board of directors. The controller reports to the CFO.
  • The CFO typically has more responsibility than the controller in the form of long-term planning and managing investments.

Both the CFO and financial controller are valuable members of a finance team and play an important role in the success of any organization.

But the CFO has more responsibility and higher-level decision-making power, while the financial controller is focused on managing the day-to-day operations.

Key Goals of Financial Controllers

Financial controllers have five primary goals that must be met to ensure the success of their organization.

  • Managing Accounting Functions: Revenue operations, accounting teams, and other financial departments all require oversight from the controller. The controller oversees financial operations in their entirety, including the financial close, accounts payable and receivable, budgeting, and financial reporting.
  • Analyzing Financial Data: By looking at and quantifying key financial data, controllers can help CFOs and other leadership analyze investments, assess risks, and make sound business decisions.
  • Producing Financial Reports: Financial controllers are responsible for preparing financial statements, including the income statement, balance sheet, and statement of cash flows.
  • Budgeting Process: Controllers play a major role in the budgeting process. They ensure that budgets are optimized, tracked, and adhered to, as well as identify cost-saving opportunities for the future.
  • Financial Risk Management and Compliance: Controllers must ensure that their organization complies with relevant laws and regulations and minimize future financial risks.

Financial Accounting vs. Financial Controlling

Financial accounting and controlling are both essential functions of any business operation, but there are a few fundamental differences between the two.

  • Financial accounting involves recording and analyzing data related to transactions within an organization. Controllers look at the bigger picture, taking into account budgets, cost savings opportunities, investments, risks, and other factors. 
  • Financial accounting focuses on the past and present, while controllers focus on the current year’s books and future planning. Controllers use their insight to create revenue forecasts and make predictions that inform future strategies and decision-making.
  • Financial accounting is a subset of the larger field of financial management, which the financial controller oversees in its entirety.

In short, financial accounting involves recording and reporting on financial transactions, while the controller uses that data to manage the organization’s financial health and plan for the future.

Required Skills for Financial Controllers

Financial controllers must have a wide variety of skills and competencies in order to be successful.

The most important skills are:

  • Strong Accounting Skills: Controllers must have an excellent understanding of accounting principles, as well as the ability to interpret financial statements. They must have all the skills required to be a financial accountant as a baseline for their role.
  • Analytical Skills: Analyzing large amounts of data and drawing meaningful conclusions about revenue growth and business health is a major part of the role, so controllers must have excellent problem-solving and analytical skills.
  • Communication Skills: Since controllers oversee various members of the finance team, they must be able to communicate goals and expectations effectively.
  • Leadership Skills: Controllers must have strong leadership skills to motivate their team and ensure everyone is working together towards a common goal.
  • Business Acumen: Beyond accounting and leadership skills, a controller needs a raw understanding of business processes to be successful. They must think strategically and have the ability to make informed decisions about investments, risks, and other financial matters that have company-wide implications.

Tools for Financial Controllers

There are various tools available to help controllers do their jobs effectively. By automating various tasks and prioritizing collaboration, controllers can efficiently manage teams and ensure accurate financial reporting.

  • Accounting Software: Accounting software is essential for recording and managing company financial data.
  • Expense Tracking: Expense tracking software allows controllers to easily track employee expenses and ensure they comply with company policies.
  • Budgeting Tools: Budgeting tools make it easy to create budgets and track performance against them.
  • Payroll Software: Automated payroll tools integrate with accounting software to make managing employee wages and deductions easier.
  • Financial Dashboards: Financial dashboards help controllers visualize data in a single place and quickly make informed decisions. They can also be used to share progress with other members of the finance team, as well as with stakeholders.
  • Risk Management: Risk management software, such as Riskpulse or Resolver, helps controllers identify and mitigate potential financial risks quickly and efficiently.
  • Billing Software: Billing software helps controllers automate invoicing and payment processing. This saves time and ensures consistent delivery of payments to vendors and employees.

People Also Ask

Is a Financial Controller the same as an Accountant?

Financial controllers are not the same as accountants. An accountant typically handles day-to-day accounting tasks such as recording and analyzing financial data, while a controller oversees the entire team of accountants and makes strategic decisions about company finances.

When does a company need a Controller?

A company should hire a controller once its annual revenue reaches $5-10 million, or at the point where it needs to report based on Generally Accepted Accounting Principles (GAAP).

What size companies bring in financial controllers?

Financial controllers are usually employed by medium to large-sized companies. The size of the company depends on the complexity of its financial processes and needs. Companies with revenues between $10-100 million generally bring in a controller to help manage their financial operations.