What is a financial controller? The function and formula for success.

Financial controllership can be challenging to describe because of its span. It bridges the gap between traditional accounting and newer fields such as financial strategy and management.

Financial controllers should pay attention to detail while considering the big picture. Their jobs often conflict because they have to prioritise accuracy over efficiency.

Like many others in the modern workforce, this position is constantly changing. Many financial controllers now strive for the increased strategic responsibility that comes with businesses today.

With this in mind, let’s dig deep into what financial controllers do and why they do it. We’ll start by defining their role and responsibilities.

What is the role of the controller in the financial sector?

A company’s financial controller acts as the primary accountant for the business. They keep an eye on the books and ensure the money coming in matches the money going out. Strategic controllers use accounting data to influence company-wide decision-making, forecasting, and budgeting.

Alternatively, the term “comptroller” may be used to describe this position.

According to The Strategic CFO, “a controller has responsibility for the accounting and record keeping of an enterprise. Information technology, insurance, sales tax, federal income tax, external CPA audits, and human resources management are all possible duties. Financial and regulatory conformity is primarily the purview of the Company’s controller. In a way, controllers might be viewed as the “historians” of the business”.

Their typical duties consist of the following:

• Oversight of general accounting
• Formulating internal guidelines and budget restraints
• Managing third-party tax advisors
• Creating a financial foundation
• Collecting money owed by clients and other debts

The position occasionally also entails some project management. The controller may also serve as the head of finance or chief financial officer  (CFO) in smaller finance teams. They must oversee the position’s “control” facets, prepare financial reports, develop budgets, and schedule business expenditures.

Therefore, a financial controller’s responsibilities might vary widely depending on the company.

The duties of a financial controller

The FC acts as the team’s top financial executive. The capacity to guide people and assume control of the company’s accounts and extensive experience in accounting and tax concerns are thus essential qualifications for any accounting position.

You’ll need more than a head for numbers to accomplish this. Controllers must be highly organised and capable self-managers to ensure that the rest of the organisation adheres to company policy and procedures.

Randstad states, “As the critical link that binds finance to the full senior leadership team, you must be a great communicator and understand the whole organisation. It is not enough to simply know about the inner workings of your own department.”

Therefore, a financial controller must possess excellent leadership qualities, a natural gift for inspiring and motivating others, and considerable charisma.

Financial controllers are expected to fulfill their highly technical financial job within the context of the overall firm. The so-called “soft skills” should not be underestimated.

The difference between controlling and accounting

As was previously said, the controller plays a crucial role in the company’s books. Additionally, they will frequently perform accounting tasks.

However, in larger financial teams, the two roles are distinct.

Accounting

Accounting entails maintaining a record of a business’s financial dealings. Duties consist of all monetary transactions occurring within and outside the company. Therefore, accountants’ primary focus is on maintaining an efficient and accurate system of recording financial transactions.

Controlling

As was discussed, controlling is more focused on checking that all data is collected correctly, on schedule, and according to company policies. The controllers are responsible for spotting accounting inconsistencies, investigating their causes, and contacting the relevant parties.

In most organisations, they are also responsible for the regulations and processes that staff follow when making a purchase. The financial controller usually establishes and enforces the organisation’s cost policy.

At the end of each fiscal period, accountants and financial controllers work together to close the accounts and prepare them for the following period.

CFO vs Controller

An interesting dynamic between two key roles sometimes comes into play. It is not uncommon for one individual to serve as the finance department’s controller and chief financial officer on smaller finance teams.

The CFO serves as an executive leader and head of the financial department. First, they must ensure that the financial team is well-organised and that all necessary tasks are completed. Conversely, they must make long-term decisions to propel the business to its full potential. This may entail collaboration with the CEO and making board presentations.

The CFO doesn’t need to be an accounting genius. They might better grasp efficiency and budgeting thanks to their consulting or business experience.

However, the financial controller must have extensive knowledge of accounting. They will not succeed if they cannot immediately identify tax or balance concerns in a ledger. What’s more, they have to be able to find the best professionals to carry out this work.

This EY report citation summarises the partnership well:

The financial controller acts more like the financial operations officer than the chief financial officer. They guarantee a smooth operation, eliminate surprises, and produce positive audit results. The Chief Financial Officer monitors the books and places a premium on communicating with investors and securing the firm’s future.

Essentials of good controllership

Understanding the duties of the financial controller is not enough. There are obvious opportunities for improvement in this role, taking you from a data-entry clerk to a valued member of the company’s team.

Some crucial factors in achieving this goal are discussed below.

We must increase our reliance on automation. Every accountant knows that a significant amount of manual data entry is still involved in keeping track of financial transactions. It’s not only the first time; if mistakes are uncovered late, you’ll have to rework much of the information you entered.

In most cases, this is pointless. Most financial information can be entered and replicated across systems electronically.

Make sure you’re not entering the same information twice. Accounting software and an enterprise resource planning system should be able to communicate with any other systems your business uses. You and your team shouldn’t have to manually update each of these to have accurate information. You may begin automating your audit trails or expenditure tracking by implementing this.

Ensure your communication is crystal clear.

According to EY’s report, communication is where FCs (as judged by themselves) have the most considerable disparity between importance and performance. Most FCS questioned acknowledged that they had room to improve their communication skills. Then, technical accounting knowledge and the ability to lead came into play.

This part of their role necessitates talking to their subordinates and coworkers on the finance team. However, one area that always requires improvement is internal communication. The financial department depends on other departments (such as sales, marketing, and purchasing) to adhere to guidelines and provide them with relevant data.

The primary difficulty is effectively communicating the importance of reliable data to those who do not yet see its value. Still, many executives in the financial sector don’t understand that just because a policy is documented somewhere doesn’t mean that people implement it.

Grant other teams the freedom

A further serious problem with many financial procedures is their over-reliance on the finance department. Consider the processing of invoices as an example. The typical business model looks like this:

• A supplier provides a service to a frontline employee (e.g., freelance advice).
• An invoice is generated and sent to the employee by the supplier.
• The employee then submits it to their superior for review.
• The invoice receives the manager’s stamp of approval.
• The employee submits the invoice to the finance department.

The finance team must determine the most critical data, extract it from the invoice, enter it into a program (or at least a simple spreadsheet), and save it in the correct location. In regular events, the invoice is paid after some time has passed.

After the company has made payments, the accountants must reconcile the invoice before the books can be closed.

Instead, the employee receives the bill and inputs it into a tool for handling invoices and other expenditure forms. No emails are needed, the manager may authorise the invoice without leaving the application, and the finance team doesn’t have to do any data input at any point in the process.

This system is beneficial because staff members learn what a legitimate invoice consists of and how to create one. The repetition of future issues is therefore avoided.

Find out more about how you can automate your invoicing processes.

Steward and operator versus strategist and catalyst

The intriguing job of the controller is examined in depth in a report by IMA and Deloitte. The author classifies typical controller duties into four broad categories:

• Steward – minimising risk and protecting resources
• Operator – ensuring effective and efficient operations
• Strategist – determining the direction of the business
• Catalyst – encouraging motivation for action

Most controllers do each of these four tasks. However, the majority, as per the study, believe that they devote too much time to the first two, the more conventional, practical roles.