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Startup Accounting
December 29, 2020
It’s not always obvious which roles you should be hiring for in your company or when to do so. For many high-growth startups, hiring for the financial side of a business presents its own set of complexities, among them whether to hire a controller or a chief financial officer (CFO). What’s the difference in these roles, and which one is most important for your business?
This article examines the roles and responsibilities of a CFO vs. a controller, and identifies signs that indicate your startup should hire one or the other. We’ll also introduce a third option that can fulfill your startup’s financial management needs—without hiring either one.
A CFO is:
The senior executive responsible for managing the financial actions of a company. The CFO's duties include financial planning and tracking cash flow as well as analyzing the company's financial strengths and weaknesses and proposing corrective actions.
CFOs focus is on long-term strategic financial planning and growth working closely with the CEO; they make decisions based on analysis of the accounting department as well as the sales and marketing departments. In addition to strategic planning, CFO responsibilities include overall financial strategy, preparing financial projections, scenario modeling, comparing actuals vs. budget, reporting and presenting financials to the board/investors, and more.
A controller oversees the accounting operations of a company.
Controllers are responsible for financial management and regulatory compliance; overseeing accounting and record-keeping operations, including preparation of financial reports (profit & loss/income statement, balance sheet and cash flow statement), are included in their role. They may also be responsible for managing other business-wide issues, including IT, human resources, insurance, sales tax reporting, and federal income tax reporting, among others.
You can learn more about the role of the controller in our article, When Should Your Startup Hire a Controller?
Area Of Responsibility |
CFO |
Controller |
Functional oversight/management |
|
|
Accounting: GAAP |
✅ |
✅ |
Accounts payable/receivable/billing |
✅ |
|
Financial Analysis |
✅ |
|
Tax |
✅ |
|
Treasury Strategy |
✅ |
|
Non-finance staff responsibility (HR, IT, etc.) |
✅ |
|
Strategic Planning |
|
|
Participation in strategy discussions |
✅ |
|
Selection of initiatives |
✅ |
|
Creation of financial plan (p/l, b/s, cash) |
✅ |
|
Tax strategy |
✅ |
|
Risk Management Strategy |
✅ |
|
Internal Control Strategy |
✅ |
|
Market/Product Analysis |
✅ |
|
Management Reporting |
|
|
Design management reports |
✅ |
|
Prepare management reports |
✅ |
|
Develop action plans for management reports |
✅ |
|
Design financial statements: historical and projections |
✅ |
|
Prepare financial statements: historical and projections |
✅ |
|
Budgeting/Forecasting |
|
|
Develop budget targets and other financial plans |
✅ |
|
Facilitate budget process |
✅ |
|
Prepare budgets and financial forecasts |
✅ |
|
Project cash flows |
✅ |
|
Review capital requests/approval process |
✅ |
|
Process capital requests |
✅ |
|
Job costing |
✅ |
|
Board of Directors/Investors |
|
|
Board reporting, preparation and delivery |
✅ |
|
Maintain investor relations |
✅ |
|
Contracts/Outsourced Functions |
|
|
Negotiate contracts |
✅ |
|
Negotiate outsourced functions |
✅ |
|
Maintain insurance coverage |
✅ |
|
Mergers & Acquisitions/Divestiture Activities |
|
|
Develop M&A targets |
✅ |
|
Financial offer |
✅ |
|
Negotiate acquisitions |
✅ |
|
Due diligence |
✅ |
✅ |
Implementation |
✅ |
✅ |
Divestitures/shutdowns |
✅ |
✅ |
Investment/Funding Activities |
|
|
Develop banking relationships |
✅ |
|
Maintain banking relationships |
✅ |
|
Arrange debt financing |
✅ |
|
Conduct equity placements |
✅ |
|
Invest funds |
✅ |
|
Issue credit to customers |
✅ |
|
Monitor cash balances |
✅ |
|
SEC/SOX/Internal Controls/Audit |
|
|
Review and submit SEC reports |
✅ |
|
Prepare SEC reports |
✅ |
|
Design and review policies and procedures |
✅ |
✅ |
Maintain policies and procedures |
✅ |
|
Review internal control system |
✅ |
✅ |
Maintain internal control system |
✅ |
|
Manage auditor relationship |
✅ |
✅ |
Prepare audit information/schedules |
✅ |
|
Develop action plans relative to internal control needs |
✅ |
✅ |
Financial Analysis |
|
|
Develop key metrics measurements |
✅ |
|
Maintain key metrics measurements |
✅ |
|
Banking and operational reporting package |
✅ |
|
Develop action plans |
✅ |
✅ |
The answer to this question depends on your company’s size, stage of business, and infrastructure.
Some signs that you may need a controller are:
Some companies skip hiring a controller and instead hire a CFO. We do not recommend this for smaller companies, as most startups at the seed or Series A stage don’t have enough tasks to require 40+ hours of work from a full-time CFO each week. The major issue here is that companies who hire a CFO too early end up paying someone a full-time, CFO-level salary to carry out tasks that aren’t CFO-level, and should be carried out by another role. Additionally, a CFO typically isn’t involved in everyday accounting duties, data entry, supervision of bookkeeping staff, etc. CFOs are business advisors and contribute to the fundraising process, but don’t don’t oversee day-to-day financial data.
Learn more: When Startups Should (And Shouldn’t) Hire a Chief Financial Officer
When you might need a CFO:
For early stage startups that don’t need a full-time CFO, a solution like Zeni is the best choice.
Zeni is a full-service finance firm that handles your startup’s part-time CFO needs as well as the bookkeeping and accounting functions for startups and small businesses. Unlike other fractional CFO services, Zeni handles finance functions more cost-effectively and intelligently than traditional outsourced CFO solutions.
When you sign up for the Zeni CFO Plan, you get a dedicated CFO advisor as part of your finance team with experience in your business vertical who handles all your financial planning and analysis, including:
In addition to CFO services, Zeni also manages all your bookkeeping and accounting, including daily bookkeeping, bill pay, and invoicing with our AI-powered system. As a result, your CFO advisor won’t need to spend time on basic finance tasks, and can focus on the areas that actually require their expertise. Plus, this deep understanding of your company’s finances means your CFO advisor will hit the ground running, and can start delivering the CFO support you need from day one—all for a flat, monthly fee.
From monthly bookkeeping and accounting services to invoicing and CFO services, Zeni is the full-service solution your startup needs. Get a demo of Zeni today!
from our blog - the balance sheet
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