Controller Accounting: When do you need one?

The accounting world has many different rules and requirements. From accrual accounting to full absorption to revenue recognition, these rules can be overwhelming. Within the accounting industry, there are different levels of accountants, from bookkeepers to controllers to Chief Financial Officers (CFO).

These different rules and levels can be confusing to most, even accountants who live and breathe this lifestyle. For the business owner, understanding the accounting rules and levels can be even more stressful when they need help with their financials. In this post, we are going to discuss the financial controller.

What is a controller, what do they do, and when a business owner should hire one?

What is a Controller?

A controller is an experienced accountant who manages the accounting staff of a company. They coordinate and verify the accuracy of the financial statements. They are proactive in the financial aspects of a company, particularly in budgeting and forecasting.

Qualifications

A controller will usually have a college degree in accounting. They will be well versed in the accounting rules. Many controllers will have certifications, such as Certified Public Accountant (CPA), Certified Managerial Accountant (CMA), or special certifications in a particular industry such as construction.

The Controller will usually have more qualifications than the accounting staff they manage.

Common tasks – What do they do?

The controller can best be thought of as the management layer between the Chief Financial Officer (CFO) and the staff accountants. At their position, they will focus on:

- - Accounting Team: They will make sure the accounting staff, such as the accounts payable clerk and payroll clerk, have the appropriate support. Their level of experience allows them to step into each of the positions and assist with issues that may come up. They also will keep the staff on track, from making sure invoices are paid timely to verifying customer invoices are getting processed. They keep the day-to-day accounting tasks running smoothly.

- - Provide Accurate Financial Statements: Their expertise allows them to compile all of the accounting data and produce accurate financial statements. One of the critical aspects in the accounting department is producing accurate reports. Without accurate reports, future decisions can harm the company or miss out on opportunities.

- - Proactive Reporting: They will use the historical financial information and update the yearly budget and forecasts. This step is critical, as being able to understand the trajectory of a company is vital for the future profitability. Constantly updating and adjusting the forecast give management the time they need to pivot to meet the budgeted goals.

- - Support the CFO: The controller closely works with the CFO to provide the insight on the detail behind the numbers. The CFO is more strategic focused, so having an experienced individual who is immersed in the details assists in producing the best strategic vision.

When do you need a financial controller?

Most larger businesses have both a financial controller and a CFO. But at what level should a small business consider hiring a controller? Common factors to use when deciding to bring in a controller:

- - Rapid Growth: When a small business starts to experience rapid growth, the volume and complexity of the financial transactions starts to overwhelm the bookkeeper. The bookkeeper starts to just focus on data entry and either doesn’t have the time or ability to see the larger financial picture.

- - Accounting and Timing of Information: Like rapid growth, the timing and accuracy of financial statements can be hampered. The need for more experience accountants becomes more important when strategic decisions need to be made quickly.

- - Coordination of the Accounting Staff: When the owner or CFO are having to spend significant amounts of time coordinating and managing the accounting staff, then it is time to bring in the next level. As the business saying goes, “Are you doing the right job at the right rate?”

Cost of a financial controller

The cost of an accounting controller can vary by geographic location. On average, a controller will command a salary between $51,000 – $133,00 per year plus benefits. Benefits usually run around 24% of salary, so after benefits the cash out will be in excess of 6-figures.

This should not be considered an expense, but rather an investment in the financial health of the company. Their experience will protect the business from missed opportunities plus protect the company’s financial data.

Virtual Controller

An alternative to a fulltime controller is to hire a virtual controller. The technological advances allow accessing a virtual controller easier than ever. A virtual controller, or an outsourced controller, will usually work on a set monthly fee.

They will work part time for the company, but still bring in all the management aspects a full-time controller. An additional benefit is the company will not be limited to the local labor pool.

A virtual controller can work from anywhere in the U.S. and, usually, has credentials and experience above what the local labor pool can offer. The cost will usually run around $3,400 per month, or approximately $40,000 per year.

As an additional cost savings to the Company, this type of arraignment does not require payments for benefits that are incurred with full-time employees.

Tips and Recommendations

If the company is trying to decide if they need to hire a controller, consider

- - Has there been rapid growth?
  - Are the current accounting staff competent to handle more complex transactions?
  - Is timing of financial reporting hampering opportunities, both for expansion and possible investors?
  - Is the company looking to increase their financial footprint?

Going through these questions plus looking at the company’s long-term goals will make the decision process easier and logical.

Conclusion

Whether the company wants to go with a fulltime or virtual controller, the cost should always be considered an investment to get the business to the next level.