CFO vs. Controller – What’s the Difference?

We have a client who engaged us to help them integrate an acquisition and structure a financial function for their rapidly growing company and guide its financial strategy as the company grew. Or at least we thought that was the plan.

Along the way, the CEO hired a (well-qualified) Controller and guided the role of his fractional CFO to project work in support of his Controller. This reversal of traditional relationships led me to reflect on an article I wrote back in 2015 for our print audience. It’s even more relevant today.

Here are the key takeaways:

The image above was developed many years ago to help CEOs understand the relative roles and responsibilities of the two positions. Labor-intensive duties at the bottom, leadership-intensive duties at the top, with each layer requiring more of one or the other. Each company leader has to look at the functions stacked in the triangle, from the least complex at the bottom to the most complex at the top, and ask themselves “Where does my Controller’s ability stall out so that someone else needs to step in to ensure it’s done right?” That’s where the squiggly line gets drawn. 

The next step is to look at the functions above that line and ask: 

1. “Who’s going to do all the functions above the line?” If the nature of the company is that a particular function is not likely to be needed in the foreseeable future, ignore it. 
2. But if it’s needed today or very soon, does the CEO have the skills and time to fill that role personally AND stay focused on the job of being the leader of the company? 
3. Or will it be OK to let the Controller learn on the job and hope it comes out right? 
4. Or will it be some combination of the two options, a shaky middle road demanding time and risking the outcomes?

Now suppose that the CEO understands the situation and doesn’t like any of the above options. The choices left are (a) hire a more seasoned Controller, (b) add a CFO to the management team, (c) engage a fractional CFO, (d) beef up the financial department with an FP&A manager and a treasurer – oh, then the job of overseeing those new hire becomes an additional duty of the Controller or the CEO.

Oh well, nothing’s perfect, as we’ve learned. But there are solutions that are less imperfect than others. I suspect you already know what we’d suggest – the highest level of expertise you need, but only for the amount of time you need it. But then that’s why my firm exists. We are Your CFO for Rent.