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Outsourced CFO vs. controller: Which is right for your financial strategy?
Posted by Grace Townsley
June 16, 2023
When it comes to developing your financial strategy and safeguarding your small business’s financial future, you may find yourself facing this common dilemma: You need expert financial guidance and support, but you don’t yet have the budget or resources to hire a full-time, in-house, fully qualified financial team.
If that problem sounds familiar, you’re not alone. As many as 80% of early-stage small businesses operate without a Chief Financial Officer (CFO) or controller in place. And unfortunately, what they don’t have can seriously cost them. That’s why an outsourced CFO or financial controller can be one of the most valuable — and cost-effective — financial strategy investments you can make in your small business.
What do outsourced CFOs and controllers do?
Let’s start by defining the role of an outsourced CFO. This professional has a handful of key responsibilities. They typically focus on the strategic financial management of the company they serve, offer high-level financial strategy insights, guide major money decisions, and analyze critical financial data and reports. Their main goal is to drive business growth while maintaining your company’s positive cash flow.
Outsourced CFOs also have a specific skill set. They’re typically well-versed in strategic planning, financial forecasting, capital management, fundraising, and investor and board relations. This background helps CFOs aid your decision-making, drive shareholder value and optimize your financial performance.
Controllers, on the other hand, are primarily responsible for your day-to-day financial operations. They ensure accuracy in your financial reporting, oversee your accounting processes, and help you meet regulatory and compliance requirements.
A controller’s expertise is more technical than a CFO’s. They excel at record-keeping, financial statement and report preparation, budgeting, financial analysis and compliance with accounting standards. These professionals are analytical, detail-oriented and numbers-focused.
The benefit of hiring an outsourced controller is that they can improve your financial accuracy and keep your small business compliant, so every decision can be made with a high degree of confidence.
What are the key differences between an outsourced CFO and a controller?
While “CFO” and “controller” are often used interchangeably, and can cover some of the same duties, there are a number of key differences between these two professionals.
First, CFOs are focused on the future — including strategic financial planning, growth, and long-term decision-making. But controllers tend to look backward at historical information. They focus on operations, financial management, accounting accuracy and compliance. These reports are all based on what your small business did over the past several days, weeks and months.
Another key difference between CFOs and controllers is their expertise. While CFOs may come from a broad financial background that includes financial planning and analysis (FP&A), and business management, controllers tend to be more technical experts. They may have a background in accounting, tax law, or compliance, and may have additional credentials like the Certified Public Accountant (CPA) designation.
A third major difference between CFOs and controllers is the scope of their work. Because CFOs are looking to the future, they view operations from a broad, big-picture perspective. They’re concerned with the long-term implications of your financial strategy and how each decision may impact shareholder value. Controllers, on the other hand, pay closer attention to your day-to-day financial operations, reporting and internal controls, ensuring that every dollar and data point is accounted for.
Should your small business outsource a CFO or a controller — or both?
When it comes to outsourcing your essential financial needs, choosing between a CFO and a controller may feel overwhelming. On one hand, a CFO is necessary for your company’s long-term survival. But on the other, if your daily financials are inaccurate, your team lacks the high-quality information you need to make sound decisions.
If you’re unsure which professional to outsource, consider these three questions:
How big is your business?
Larger businesses with multiple locations, product lines or teams will benefit from an outsourced CFO. Even if your leadership only needs the guidance of a CFO a few times a week or month, having a dedicated expert on call is an invaluable benefit to growing businesses.
How complex are your finances?
If your business deals with complex financial matters, like multiple revenue streams, international operations, or significant capital-raising activities, an outsourced CFO is strongly recommended. Not only will this professional help you manage your capital, having an experienced CFO on board is a good signal for your investors.
How necessary is compliance and accuracy?
If your industry requires deep compliance, like in the financial and healthcare industries, consider hiring an outsourced controller. This professional can help you keep your books in order and meet regulatory compliance — so you can feel confident in your big decisions.
As your company grows, you will likely need both a CFO and a controller on your team. And outsourcing these key functions gives your business full access to high-value expertise without significantly increasing your overhead or management burden.
In the meantime, consider the questions above. By assessing your business’s goals, size, complexity and compliance needs, you can make an informed decision about who to add to your support team.
In addition to taxes, accounting, bookkeeping and CFO services through its FinOps, Escalon’s Essential Business Services include PeopleOps (HR, benefits, recruiting and payroll) and Risk (business insurance). Talk to an expert today.
This material has been prepared for informational purposes only. Escalon and its affiliates are not providing tax, legal or accounting advice in this article. If you would like to engage with Escalon, please contact ushere.
As a professional copywriter in the finance and B2B space, Grace Townsley offers small business leaders big insights—one precisely chosen word at a time. Let's connect!