From Controller to CFO: What Changes?

Moving from being a Controller to a CFO is a big step up. It’s like going from keeping score to calling the plays. Let’s make it simple to understand what you should and shouldn’t be doing in your new role, especially if you’re used to doing everything yourself.

What’s Different?

Both the CFO and Controller deal with the company’s finances, but they focus on different things. Think of a Controller as the head of getting day-to-day money matters right, like making sure every penny is accounted for and reports are spot-on. The CFO, however, looks at the bigger picture. It’s about making plans for the company’s financial future and finding ways to make the business better.

Example: When it’s time for an audit, the Controller is hands-on, working directly with the auditors, showing them the books, and explaining the details. The CFO, on the other hand, talks strategy with the audit partner and handles any big issues that pop up.

Key Differences in Everyday Tasks:

1. Reporting: The Controller prepares financial reports; the CFO reviews these reports and uses them to make decisions or plan strategies.
2. Budgeting: The Controller gathers info and puts the budget together. The CFO looks at this budget with a telescope, considering how it fits with the company’s long-term plans and what changes might be needed.
3. Financial Analysis: The CFO decides what financial analysis to do to improve the business and shares these insights with other department heads. The Controller might help by pulling together the necessary data.
4. Control Systems: Both roles care about making sure financial controls work well. The CFO might focus on how these controls impact the whole business, while the Controller ensures they’re followed day to day.

For the New CFO: Don’t Get Stuck in the Weeds

The biggest trap for new CFOs coming from a Controller background? Trying to do both jobs. You might end up swamped, doing neither well. It’s important to step back from the day-to-day and think about the company’s finances from a higher level. Focus on strategy, future growth, and how money can be used more effectively. Leave the daily grind to the Controller and trust your team.

Moving Forward

For a smooth transition:

1. Delegate: Trust your team with the day-to-day.
2. Strategize: Spend your energy on planning for growth and improving the business.
3. Communicate: Keep talking to your team, especially the Controller, to ensure you’re all aiming for the same goals.

Taking on the CFO role is about leading change, guiding strategy, and ensuring the company’s financial health in the long run. It’s a shift from looking at what happened to planning what could happen. Make sure you’re ready to look ahead.

The Risks of Not Stepping Fully into the CFO Role

If you don’t fully embrace your new role as CFO and keep hanging onto your old financial management tasks, here’s what could happen:

Overwhelmed by Workload:

Trying to juggle the responsibilities of both CFO and Controller will likely lead to burnout. There are only so many hours in the day, and spreading yourself too thin means you can’t give your best to any one task.

Strategic Opportunities Missed:

As CFO, your job is to look ahead and steer the company towards its financial goals. If you’re too caught up in the nitty-gritty of daily financial management, you’ll likely miss out on bigger opportunities for growth and improvement.

Stagnation:

Companies evolve, and their financial strategies need to evolve too. Without a CFO fully focused on the future and driving strategic financial planning, the company risks becoming stagnant, unable to adapt to changes in the market or capitalize on new opportunities.

Team Morale:

Part of moving up to a CFO role is trusting your team, especially the Controller, to handle the day-to-day financial tasks. If you don’t step back, it could signal a lack of trust, affecting team morale and potentially leading to turnover in key positions.

Financial Insight:

While immersed in the details, you might lose sight of the broader financial picture. A CFO needs to provide high-level financial insight and foresight, something that’s tough to do if you’re bogged down in everyday financial management.

The Bottom Line

Stepping into a CFO role means changing your focus from what’s happening today to what the future could look like for your company. It involves trusting your team, delegating effectively, and concentrating on strategic financial planning. Not making this shift can have real consequences for both your personal well-being and the company’s success. It’s about leading, not just managing.

Appendix – A detailed list of the different roles

In the contemporary corporate landscape, the roles of Chief Financial Officer (CFO) and Controller are both pivotal, yet distinct in their areas of focus. This delineation of responsibilities highlights the synergy and division of tasks within an organization’s financial architecture.

Accounting Responsibilities:

Both the CFO and Controller collaborate on overseeing the annual audit, ensuring thoroughness and compliance. The Controller is primarily responsible for the meticulous handling of accounts payable and receivable, including the timely payment of invoices and the collection of monies owed. They also seek to capitalize on available discounts for accounts payable, issue billings promptly, and diligently calculate job costs. The completion of bank reconciliations and management reports falls under the Controller’s purview, who also prepares and issues financial statements. The CFO, while keeping a broader view, also participates in the filing of information with the Securities and Exchange Commission (SEC), as well as maintaining robust policies and procedures.

Financial Reporting and Management:

The Controller is entrusted with maintaining the chart of accounts and overseeing outsourced functions. They manage the accounting staff directly, ensuring efficient and accurate financial operations. Both roles share responsibility in managing the budgeting process, with the CFO additionally reviewing capital requests. The Controller handles the intricate process of payroll and works to implement operational best practices. The duo contributes to financial analysis, with the CFO often spearheading this task. They work in tandem to develop and maintain performance measurements, with the Controller specifically tasked with reviewing control weaknesses.

Strategic Financial and Risk Management:

The CFO is the architect of the company’s financial strategy, including tax and risk management strategies. This role involves negotiating acquisitions and maintaining fruitful banking relationships. When it comes to arranging for debt financing and conducting equity placements, the CFO takes the helm. They also oversee the investment of funds, including pension funds, and are responsible for issuing credit to customers.

Insurance and Investor Relations:

The Controller ensures that the company’s insurance coverage is adequate and up-to-date, thus mitigating financial risks. The CFO, with a broader strategic scope, monitors cash balances closely to optimize liquidity and financial health. A key part of the CFO’s role is to nurture and maintain investor relations, securing the trust and confidence of stakeholders through transparency and strategic communication.

By clearly defining these roles, the organization ensures a robust financial management system where strategic planning and day-to-day operations are seamlessly integrated, fostering financial integrity and the realization of long-term business objectives.