A growing business is a good thing. However, managing that growth can be challenging, especially where your finances are concerned. If you’re struggling with who to hire to support and guide your financial department, it’s important that you understand what each upper-level financial position entails. Here is a quick breakdown of the differences between a CFO, controller, and financial analyst as well as how you should go about deciding when to hire each one.
What does the CFO role look like?
A chief financial officer (CFO) focuses on financial responsibilities as they pertain to a business as a whole. They should take into account things such as:
In other words, a CFO should operate as more than a member of your back office. They’re more of a business partner, supporting the CEO and COO by bringing a unique, financial perspective to an organization’s strategic planning.
In fact, Deloitte Chief Strategy Officer John Meacock points out that “a CEO must position himself or herself as more than a number cruncher, but as someone with a deep understanding of the business as a whole.”
Interestingly, Meacock also delineates that, as CFOs have moved up the chain of command in recent years, it has created a gap. Many companies have filled this more functional need with another position: a financial controller.
What is a Controller?
When compared to a CFO, a controller is often seen as a boots-on-the-ground hire. They are focused on the financial operations of a company.
While still a financial leadership role, a financial controller should be focused on budget-related activities. Areas like payroll, operational budgets, managing internal controls, and reporting on the financial condition of the company all fall within their domain.
A controller’s scope tends to be more restricted to the financial end of things. Nevertheless, the role is still expansive within those bounds. In the past, a controller was restricted to little more than a bookkeeping role. The modern-day position has grown to include areas of activity such as financial analysis and auditing compliance. In addition, a controller tends to work closely with and report to the CFO.
When considering a controller, you should have the entire scope of your financial department in mind. However, their responsibilities shouldn’t go far beyond that area of expertise.
What is a financial analyst?
A financial analyst is a position that deviates from the high-minded managerial and strategic activities of a CFO and even a controller. Overall, a financial analyst’s work tends to focus on interpreting data in order to provide financial guidance for a company.
A financial analyst focuses on gathering, organizing, and analyzing data — both in the past and present. From there, a financial analyst will use their analysis to create forecasts and projections of future financial performance. Often they will specialize in generating financial reports and presentations.
A senior financial analyst takes these basic activities to the next level. They use experienced and proven financial acumen to assess economic conditions, financial risks, and real-world solutions. They do so with the purpose of providing specific, actionable recommendations to the financial officers in the C-suite. They also add a management dimension to the financial analysis activities by overseeing larger teams of analysts.
How to address your company’s financial staffing needs
Deciding what financial positions to fill can be daunting. However, you can often figure out what to do through a quick review of your company’s larger needs. When it comes to a financial analyst, if you’re operating a larger company, you’ll want to have a team of analysts with a senior financial analyst overseeing and directing the group. This can provide you with a solid stream of data-backed financial advice on a daily basis.
While helpful, though, a team of financial analysts won’t address the fiscal leadership needs of your company. If you’re lacking financial strategy and guidance, a CFO is probably the best answer here. If you feel that your financial team requires greater efficiency, speed, or supervision within its existing activities, a controller is likely the solution.
Revenue and organizational size are also important factors here. If you’re operating a company that is under that $10 million revenue threshold but over $500,000, you may only need a financial controller. Often, at this size, a controller may even be able to participate in some minor CFO activity.
However, once you scale beyond the $10 million, you want to consider bringing a CFO into the mix. That said, this new hire shouldn’t replace your controller. On the contrary, you want to maintain that position to keep your financial department operating on a solid footing.
As your company scales, though, a CFO can help with larger organizational decision-making. This includes things like navigating through the major changes of the post-pandemic new normal as well as providing top-level strategies and guidance for your controller, financial analysts, and other members of your financial team.
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