What Is a Financial Controller?
A financial controller is a key individual who oversees all accounting-related activities within a company, including high-level accounting, managerial accounting, and finance activities. The controller’s responsibilities include assisting with the preparation of operating budgets, overseeing financial reporting, and managing essential duties related to payroll.
Key Responsibilities
- Financial Oversight: A controller acts as a steward of a company’s financial health by taking ownership of the financial reporting process.
- Internal Controls: Implementation of internal controls, helping with budget preparations, ensuring reporting compliance, and managing transaction reporting.
- Experience Requirements: Controllers often have at least a decade of relevant work experience and often a higher-level degree or CPA license.
- Differentiation from Other Roles: While different from CFOs or VPs of Finance, controllers are often more involved in day-to-day transactional aspects of a company’s performance.
The Role of Financial Controllers
The role of a financial controller may vary depending on the size and complexity of the organization. In smaller companies, controllers may wear multiple hats, whereas in larger corporations, duties are more dispersed among various financial executives including the Chief Financial Officer (CFO) and treasurer.
Controllers ensure that all financial transactions are reported accurately, involving areas such as accounts payable, purchasing, vendor management, treasury, financial reporting, and financial planning. They also participate in recruiting, selection, and training of finance staff.
Roles of Financial Controllers
Steward
Controllers manage risk and preserve assets by ensuring internal controls have been implemented. They play a crucial part in audit functions by collaborating with external auditors to ensure compliance.
Operator
Controllers manage day-to-day financial operations from a high level. This includes overseeing vendor set-up, invoice processing, payment remittance, and the functioning of accounting software.
Strategist
Controllers guide the direction of the company by being involved in accounting software implementation programs, informing about necessary financial reporting functions, customizations, and system shortcomings.
Catalyst
Controllers ensure that processes are not only put in place but also executed properly. They ensure compliance with external reporting and filing requirements imposed by regulatory agencies.
Important Duties
Controllers often take on various tasks common across organizations:
- Manage Cash Flow: This includes forecasting cash flow needs and alerting management about deficiencies.
- Audit Liaison: Controllers meet with external audit staff and communicate audit outcomes to senior management.
- Monitor Internal Controls: Work with audit teams to gather feedback and improve control processes.
- Invoice Approval: They have high-level approval rights for significant transactions.
- Budget Preparation: Provide essential historical data for budget creation.
- Financial Compliance and Reporting: Ensure reporting requirements are met and that financial reports are prepared accurately.
- Cost Identification and Saving: Seek out operational efficiencies and resource optimization.
- Mentor Staff: Lead financial teams and nurture talent development.
According to data, a financial controller makes a median salary of around $156,000 annually, inclusive of base pay and other compensations.
Necessary Skills and Qualifications
To become a financial controller, proficiency in education, experience, and often licensure is essential:
- Education: A bachelor’s degree in accounting, finance, business administration, or a related field is almost always necessary, with a master’s often preferred or required.
- Experience: Typically, controllers have between five to ten years of relevant professional experience, although larger corporations may seek 20+ years in a related industry.
- Licensure: For many positions, a CPA, CMA, or other relevant financial certification is recommended, and often required for public companies.
Career Path
Financial controllers usually start in accounting, often in public accounting, moving through positions that build their expertise in various financial functions. This often includes roles in private sector accounting departments and positions like assistant controller before fully transitioning to a controller role.
Accounting vs. Controlling
While controllers work closely with the financial accounting processes, there is a critical distinction. Controlling ensures that all financial data is recorded accurately and timely. Controllers oversee the accounting process but do not necessarily perform the day-to-day accounting activities.
Controller versus Other Financial Roles
Controller vs. Chief Financial Officer (CFO)
Controllers handle detailed financial reporting tasks, while CFOs focus more on high-level strategy, mergers, acquisitions, and investor interactions.
Controller vs. Vice President of Finance
A controller manages internal financial processes and reports, whereas a VP of Finance may oversee broader strategic financial planning and often has higher executive authority.
Controller vs. FP&A Director
Controllers focus on accurate and timely historical transaction reports, while FP&A directors use these reports to build forward-looking budgets and forecasts.
Controller vs. Comptroller
The title of comptroller is more commonly associated with government or non-profit sectors and carries similar, though often broader and more senior, responsibilities than a controller.
Reporting Hierarchy
Controllers typically oversee specific departments within finance, such as accounts payable, procurement, purchasing, financial reporting, or payroll.
Importance of the Controller Role
Controllers are essential for accurate financial reporting, identifying risk mitigation strategies, understanding financial inaccuracies, and implementing changes to improve future financial performance.
Conclusion
A financial controller is crucial for the accurate and strategic management of a company’s financial health. While not always an executive-level role, controllers play an integral part in delivering well-prepared financial statements, improving internal processes, and leading the financial aspect of a company’s operations.
Related Terms: CFO, CPA, internal controls, financial planning, budgeting, audit compliance
References
- Glassdoor. “How Much Does a Controller Make?”
- Institute of Management Accountants. “Stepping Outside the Box: Elevating the Role of the Controller”.
- U.S. Bureau of Labor Statistics. “Financial Managers”.
