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.
CFO Vs. Controller: What’s the difference?
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?
CFO vs. Controller Responsibilities: A Detailed Breakdown
Which Does Your Startup Need—A CFO Or Controller?
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:
- You are experiencing rapid growth—and therefore have complicated finances.
- Your annual revenue is between $500,000 and $1 million. At that revenue level you are required to keep accounting records according to Generally Accepted Accounting Principles (GAAP), and so would benefit from hiring someone who can offer advice as well as take care of historical financial records. (We recommend that even startups below this revenue level follow GAAP accounting—here’s why.)
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.
When you might need a CFO:
- As your company grows, you may find your controller does not have adequate business experience to advise on growth strategies.
- If you still don’t have enough work for a full-time CFO, consider working with a contract or part-time CFO instead. Part-time CFO solutions offer many of the benefits you would expect from an in-house CFO, but on an as-needed basis that suits early-stage startups.
Zeni: A Smart Financial Solution For Early-Stage Startups
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:
- Scenario modeling and cash flow projections
- Variance tracking between budget and actuals
- Ongoing financial consultation
- Preparation for key financial reporting
- Presentation of your business financials in board meetings.
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.