What Does a Financial Controller Do in Accounting?

Financial Controllers (FCs) typically operate in one of four categories called the “four faces of control”. These represent governance operators, catalysts, and strategies.

Managing responsibility and operations make up most of the Financial Controller’s work time.

Catalysts and strategies together make up about 30% of Controller work with responsibilities focusing on:

  • Stewardship – Protect and maintain business resources and accurately report on its finances
  • Operator: Manage financial operations in an efficient way
  • Catalyst: Provide the correct information for business execution

Photo by Giorgio Tomassetti on Unsplash

Photo by Giorgio Tomassetti on Unsplash

Understanding Financial Controllers

A career in finance requires Accountants to move through the ranks as they gain more experience and skills. A natural stepping stone for Financial Managers or a company’s Lead Accountant would be that of a Financial Controller.

The position is critical to gaining fundamental knowledge about financial planning and financial reporting to progress into a Finance Director or Chief Financial Officer. A Financial Controller is considered number two to an FD or CFO in most organisations.

The role has evolved from looking after accounting and financial staff and, in general, overseeing an accounting department to combining public accounting oversight with financial management responsibilities and financial strategy.

Photo by Adeolu Eletu on Unsplash

Photo by Adeolu Eletu on Unsplash

Controllers Function As “Number Translators”

A Controller oversees the proper analysis of financial operations and translates the information from such a report into accounting documents. Controller responsibilities include overseeing Accountants of large corporations, Payroll Managers, Tax Managers, and the financial management of staff members.

Generally, Controllers are accountable to the CEO of the finance company. Controller and Treasurer can have different financial management duties. The Controller is usually the only Accountant employed by the firm and typically answers directly to the CEO or CFO, depending on the company’s size.

Because of their unique position as the custodian of financial information, a Financial Controller has an incredible opportunity to become a number translator.

Therefore a Controller’s job is to provide an interpretation of a company’s financial position and add commercial savviness, as well as invaluable insight into what the numbers “mean”.

Controller Accounting Duties

The Controller manages the accounting record and produces financial reports in line with financial regulations; the CFO or FD usually reviews reports before being released to shareholders or the Board of Directors.

These must be issued on time following generally accepted accounting principles. The controlling authority has the responsibility to make sure this happens. Controllers will maintain the updated financial data.

Financial Controllers are also usually responsible for the accounting and financial software known as finance and accounting systems and financial reporting solutions. It is widespread for a Controller to be involved in ERP (Enterprise Resource Planning) implementation because of the comprehensive knowledge of the company’s financial statements and to ensure that appropriate controls provide efficient accounting processes whilst maintaining effective risk management.

In doing so, they are also critical in providing insights into financial reporting tools that can be useful for analysing financial data.

A Controller also needs to organise and lead the company’s accounting team, direct its accounting operations, and occasionally advise on complex accounting and financial market transactions if they work for publicly traded companies.

Photo by ActionVance on Unsplash

Financial Controller Job Description

The FC is one of the top leadership positions within the finance department. Therefore, the job applicant will generally have considerable experience in accounting and tax matters and the ability to guide and control the company’s bookkeeping.

There’s nothing like putting numbers on the board. Supervisors should become organised independent managers who know about commuting (changing one kind of payment or obligation for another) to the larger companies, adopting policies and procedures.

A typical job description would include:

  • Monthly financial reporting and the preparation of quarterly or annual company financial statements
  • Maintaining accounting records
  • Maintenance, review, and assessment of the company’s financial processes as well as the company’s economic systems and enterprise resource planning
  • Finance and administration function
  • Creating financial reports
  • Managing banking relationships as well as External Auditors and Tax Advisors
  • Cash flow Management

The Financial Controller also manages the finance team, including Accounts Receivable, Accounts Payable, and management accountants. Therefore, their team will include an Accounting Manager, Accounts Payable, Certified Management Accountant or Certified Financial Analyst, depending on the nature of the business.

In smaller-scale businesses, the CEO and Financial Controller effectively work hand in hand in setting the company’s financial strategy.

Because of their knowledge and exposure to company processes, a Controller position will require advising company managers and business owners on company performance. Further information on the Financial Controller job description is here.

Photo by Firmbee.com on Unsplash

Photo by Firmbee.com on Unsplash

Why Are Financial Controllers Important?

Financial Controllerships are technical positions that demand professionals who can be respected experts and influence a whole organisation to follow policies and procedures.

This combination of hard and soft skills is essential for a business. A high level of satisfaction and respect for accuracy and time are crucial characteristics of effective Controllers.

A Financial Controller mixes traditional and strategic responsibilities and, irrespective of the organisation’s size, they are paramount in safeguarding company assets as they are the “fine last line of defence”.

Most Financial Controllers work closely with the Chief Financial Officer, CEO or business owners, enabling them to focus on business growth while maintaining tight controls over accounting records, financial statements, and general business administration.

In large publicly traded companies, it is normal to have a Group Financial Controller and Financial Controllers in smaller businesses as part of a Group.

Required Skills for Financial Controllers

Successful Financial Controllers know everything about financials.

Their work involves analysing the accounting process, transactions and the information contained within financial records and the general consolidated accounts, as well as the interpretation of internal and external data.

They must have an analytical mind to help companies reach their short-term or long-term goals.

It may seem contradictory, so this necessitates years of experience and training. Naturally, a knack for numbers and being savvy in relationships is also an advantage.

Commercial awareness and the interpretation of financial and non-financial data are essential: a Controller ultimately plays a crucial role in developing financial strategy and must communicate efficiently and effectively at all levels.

Because of their role, Financial Controllers require access to Management Information Systems (ERP or reporting tools); therefore, IT skills are essential.

They also need to have enough emotional intelligence to liaise at all layers of an organisation, and this skill also makes them true leaders.

More than technical skills are needed to progress further in this career.

International experience, although not strictly a skill, is generally valued for a Financial Controller in larger businesses. More information on qualifications and skills is here, and my CV, template and examples are here.

Requirements for Controllers

Candidates for Controller positions will have a bachelor’s degree, preferably in finance and accounting.

Candidates should generally have a minimum 7-year accounting degree, whilst some employers prefer candidates with a public accounting background.

Certified Public Accountants and Certified Auditors are among the most respected credentials for Controllers, although a Certified Management Accountant, or to an extent even a Chartered Financial Analyst, can pursue a career in financial controlling.

There are no specific qualifications to become a Financial Controller; most accounting bodies (ACCA, CIMA, CPA, CFA) would provide Accountants with sufficient skills and knowledge to progress to a Controller’s job.

As an example of a natural career progression, usually, Accountants will start as Management Accountants, moving to Finance Managers and then onto Financial Controllers; the next step for a Financial Controller would be CFO or FD.

Photo by Scott Graham on Unsplash

Which Companies Bring Controllers In?

From companies’ yearly revenues, Controller positions are similar. Generally, most businesses have “fully dedicated” Financial Controllers for a turnover greater than $100m; a group of companies would have many, often at different sites with a regional structure.

Smaller-size businesses of less than $10m may have one or may decide to operate with a Finance Manager with a small finance team.

The smaller the turnover, the more likely a Controller’s job will involve a more hands-on role in accounting transactions as they may not benefit from a large team.

With a CFO, these professionals can function as financial advisors to CEOs by analysing and providing financial statements.

Listed companies that must comply with the Securities and Exchange Commission (SEC) regarding timely financial statement submissions would undoubtedly need a Controller to ensure compliance with all deadlines.

Tools for Financial Controllers

Previously Financial Controllers were thought of as spreadsheet wizards.

However, given the evolution and complexity of ERP and Management Information Systems, the Controller position also covers business ownership once implemented.

Oracle, SAP, Microsoft, and Zoho have designed systems to reduce reliance on transactional work and provide add-on tools (Power BI, Tableau) to generate financial statements, financial reports, and insight analytics previously done in Excel.

As such, technology is an essential aspect of the Controller’s job role, and as such, they must keep up to date with current developments and software tools to support accounting functions, significantly reduce the time to produce accurate financial statements and run the finance organisation efficiently.

Often, Controllers are involved in Finance Transformation Projects reliant on the latest technology.

Photo by Fotis Fotopoulos on Unsplash

Photo by Fotis Fotopoulos on Unsplash

Three Steps to Becoming a Financial Controller

Job opportunities for Financial Controllers are promising, and the industry will surpass the global average for each profession.

If you want to be an accounting professional, numerous avenues are available.

A bachelor’s degree is the first step, which will assist in reducing the time it takes to obtain a Chartered Accountant qualification.

The second step would be to obtain a qualification (either ACCA, CIMA, CPA, CFA, or ACA); this step is mandatory in today’s world as it is doubtful that a non-qualified Accountant would be able to progress through to a Controller’s job.

The third step is inevitable, which is on-the-ground experience; qualifications alone are not enough, and they will all require relevant field experience.

Working in a finance department as a Management Accountant or as a Business Analyst will provide the basis of experience that complement studies and, most importantly, expose an Accountant to various company processes that will assist them in having a “balcony view” of an organisation. This trait is essential for a Financial Controller.

A Financial Controller is usually an “industry-agnostic” position. That is because of their skills. Controllers are to shift from industry to industry with minimal disruption, hence why it is a position that enables excellent flexibility in the job market. Information on how to become a Financial Controller is here.

When Does a Company Need a Controller?

As businesses become successful, their owners often devote more time to accounting records than doing business.

Sometimes bookkeeping & accounting staff are already aboard or contracted, but eventually, this person can only support some of the financial information needed for the business owners and outside stakeholders.

When businesses outgrow their bookkeepers’ abilities or availability, it is time for them to hire their first supervisors.

Therefore, revenue size is an important indicator; as mentioned earlier, CFOs and CEOs these days have an “outward-focus” role, whether it is building customer and supplier relationships or, in general, stakeholder/investor relations management; and as such, they will need a gate-keeper to ensure the solidity of their financial data.

Business complexity would be another indicator; a highly diversified company, whether product line or geographical, will need more Controllers that grasp the different financial aspects of the various product lines.

Photo by Kyle Glenn on Unsplash

Photo by Kyle Glenn on Unsplash

What Is a Financial Controller? Role & Responsibilities

Financial Controllers are Accountants involved in many different fields.

Financial Controllers are senior management officers who oversee business operations and financial reporting.

Sometimes called “company history”, Accountants oversee accounting activities within a company and manage the bookkeeping.

Financial controls of financial accounts can vary by company size. Controllers are typically involved with detailed audit tasks that exceed the company’s Bookkeeper or Accounts Payable capabilities.

They are the co-pilot to the CFO (or CEO in smaller businesses).

They need the right mix of financial acumen, commercial awareness, and technology savvy to play a critical role in any business.

Photo by Luke Peters on Unsplash

Photo by Luke Peters on Unsplash

The Function of a Financial Controller – Do I Need One for My Business?

Leadership can significantly help a firm improve through implementation and improvement in processes.

It may become difficult to understand financial terms and jargon.

As the business grows in complexity, a Financial Controller occupies a critical position to maintain adequate controls over financial data and have timely, accurate and insightful financial information.

Also, the more complex the financial data, the more you need a Controller to interpret it.

What Is the Difference Between a CFO and a Controller?

A firm’s size differentiates the role of a Finance Controller and the CFO. These managers share responsibility across all aspects of the firm’s financial processes. Financial controllers and CFOs are separated from one another when revenues reach $40 to $60 million or if a firm starts analysing financial market transactions.

As mentioned earlier, CFO roles these days are more outward-focused and involve liaising with customers, suppliers, investors, and government agencies; They, therefore, rely on Financial Controllers to manage the operational finance and assist with financial strategy; CFOs, however, will not have a hands-on role in accounting.

That said, Financial Controllers, throughout their careers, develop the skills to become CFOs.

Understanding Financial Controllers

Financial Controller – by its simplest definition in financial management- produces detailed financial records. To be successful, the person must understand operations within the company and the relationship between output and input. The Financial Controller role begins as a numbers person extending through the reports to help a financial decision-maker. A Financial Controller’s mission is accuracy, governance, policy & ethical principles. Occasionally, the job can be thankless – whilst results are apparent, the effort may be unseen.

Controller Transactions and Budgets

The Controller significantly impacts the creation and balance of business budgets against anticipated earnings. The job involves securing the payment of the accounts received on time as required and the correct debt servicing. Typically, businesses assign this responsibility to employees, such as Accounts Receivable Managers who report to Controllers, but the Controllers are responsible. They must ensure the plan makes sense. Often forecasts become essential components of the business of Controllers.

Is the Financial Controller Higher Than the Finance Manager?

Financial Managers are specialised positions with several different tasks. These duties usually are restricted and may be considered below that of the Financial Controller responsible for accounting. In cases where the Finance Manager works closely with the CFO, the finance management position is higher up.

However, the Financial Controller generally focuses on financial strategy and controls, and they are usually in a higher position than a Finance Manager.

Photo by Wes Hicks on Unsplash

Is Financial Controller an Executive Role?

In many smaller businesses, the Financial Controller is the highest level of finance. As organisations grow, their Controllers report directly to the Chief Executive Officer or CFO.

Modern Finance Controllers often need to advocate for growth in the business, which has gradually moved from traditional tasks to accounting standards. Financial controls must move beyond the number box and engage in strategic debates more frequently.

Controller vs CFO

Another fascinating dynamic. A small financial company’s Controller and Chief Executive Officer may even have one person. CFOs are leaders in the economic team as well as members of executive leadership. Aside from ensuring the finance team’s smooth operation and efficient operation, executives must make strategic decisions to achieve the company’s potential, including collaborating with the CEO and submitting a report to the Board. CFOs are not required to be accountant-educated.

Does a Controller Need a CPA?

Financial Controllers do not have to be Certified Public Accountants.

Nevertheless, a CPA Certification can help a Financial Accountant master the accounting skills required.

CPA certification includes rigorous educational and training requirements, field experience requirements, a license and annual continuing professional education (CPE) requirements. The CPA curriculum comprises a comprehensive accounting, finance, accounting, and taxation programme. Other certifications common to Financial Controllers include Chartered Financial Analysts and Chartered Financial Controllers (CFC).

Should I Hire a Controller With Industry or Big 4 Experience?

When looking for an experienced Controller, there are pros and cons to consider. A Controller with extensive industry knowledge may develop a specialised understanding of the business through long-term involvement, providing insights into how decisions affect operations.

However, Controllers of the Big 4 companies have additional technical knowledge about accounting concepts that are useful when needed in certain situations. It’s essential to compare the advantages and disadvantages before making a choice.

As mentioned earlier in the article, Financial Controllers usually have transferable skills amongst industries within limits.

What Size Organisations Bring CFOs In?

If the company’s total revenues are over $50MM, it usually has a fully dedicated CFO or FD.

But ultimately, business complexity or geographical dispersion will require a focus point at the centre, usually a CFO.

What Is the Career Path for a Controller?

Once an Accountant becomes a Financial Controller, the usual path of progression is to CFO or FD. Organisations with divisions (around product lines or geography) may have further layers, such as Regional FD or Group Financial Controllers, but in essence, a Financial Controller would aim to become the CFO of the company.

What Is a Typical Salary for a Controller?

Financial Controllers can expect to earn anything from £40,000 per year to £100,000 based on their total (relevant) years of experience. The number varies considerably based on how generous the employer is with compensation and the candidate’s work experience. For example, salaries for Financial Controllers in banks, big consulting firms or Fortune 100 companies might go up to £120,000 or even higher. Further information on wages is here.

To learn more about a finance and accounting career, please visit our resources pages here and here, or search for accountant and finance roles here.

17-02-2023

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