The role of the CFO is changing, and by extension, so is the role of the controller.
Dr. Ajit Kambil, global research director for the Deloitte CFO Program and creator of Deloitte’s Executive Transition Labs, stated in 2017 that “While companies vary, our research and conversations with CEOs indicate they’d like to see their CFOs spend nearly 70% of their time in [strategic] roles, and only about 30% on steward/operator duties.”As CFOs are now acting more formally as advisors to their company’s CEO, in larger companies it falls to the controller position to assist with or lead on strategic financial planning that previously would not be in their purview.
A survey entitled The Modern Controller: A Survey of Financial Controllers was conducted by Dimensional Research in January 2019 and sponsored by accounting automation SaaS company FloQast. It aimed to explore how the company controller’s role is transforming beyond transactional accounting more towards a strategic financial planner with operational responsibilities. Here are some of the key findings from this survey:
- The role of the controller has expanded to include risk management and internal controls: Almost all (95 percent) of respondents say their role is more strategic; while 69 percent characterize the controller as a risk manager that oversees internal controls.
- The CFO requires the controller to be more strategic: 73 percent say the controller’s role is changing because the CFO role has changed, while 90 percent report controllers are spending more time on strategic planning – a job historically done by the CFO.
- Advancements in technology mean required software competency: 78 percent of respondents say controllers now spend more time on accounting-adjacent IT management. Close management software is the innovation with the greatest potential to positively impact controllers, even when compared to cloud ERP or online accounting software.
- Job stressors have changed…and increased: 89 percent say the controller’s job is more stressful. Top stresses include management demands for speed (67 percent), a higher volume of work (64 percent), and compliance demands (63 percent).
- The controller is no longer a lone wolf: According to the survey, only a small number (31 percent) of controllers view themselves as the individual that prepares necessary financial reports. In midsize (74 percent) and large enterprises (82 percent), respondents were much more likely to view the controller as a risk manager with oversight of internal controls.
This shift has been occurring rapidly over the past few years, and controllers have had to keep up with the latest in accounting technology while being a decisive member of the company’s financial planning. This breadth of knowledge also makes the controller one of the most valuable assets in any large company.
Let’s take a more in-depth look at the breakdown of some of the primary controller responsibilities companies expect.
Risk Management and Internal Controls
Financial controls are key to optimizing financial resource management, cash flow, and operational efficiency while minimizing the risk of fraud. Today’s controllers are responsible for staying up to date with the latest standards in controls, accounting software, and automation systems that can assist in many of these processes. For example, one method of ensuring compliance is through the implementation and maintenance of audit tracking and financial oversight systems to reduce financial errors and ensure the accuracy of all accounting data. There are dozens of software service providers that specialize in controls and risk management, and the controller would be responsible for determining which one is right for the company.
The close process and development of financial statements is another process that requires a large amount of scrutiny. Any errors in reconciling your accounts payable and accounts receivable, omitted entries, GAAP standardized reporting, etc,. can severely harm the company outlook and investor confidence. A controller would ensure that closes are conducted effectively and in a timely manner by:
- Comparing current close practices against leading companies
- Improving the quality of data captured through your closing process to limit the number of adjustments
- Identifying improvements for reducing the number of days to close the books
- Pointing the way to better content for KPIs, management reporting, and dashboards
- Identifying opportunities to reduce finance function costs
Financial Planning, Budgeting, and Forecasting
Steady, long-term growth requires a sound business model that takes into consideration various factors:
- Industry realities
- Your internal and external resources
- Customer behavior and demographics
- Competitive positioning
A detailed financial plan
It’s not merely enough to look at last year’s data and develop a 12-month business plan – the speed of commerce demands that critical metrics are continually assessed and acted upon promptly and regularly. Accounting and reporting systems can be put in place to ensure the company’s financial managers have full visibility into the core metrics required to make those decisions quickly and efficiently. Systems like this allow you to be more proactive in your overall business strategy.
Many controllers work with the CFO to develop financial statements and rolling forecast tables that project up to 12-months out so that you can budget resources to meet your goals.
The controller is also becoming more involved in evaluating the impact of investment decisions, with an aim to maximizing the value of an investment and mitigating risk. Along with running analytics on the financials, this due diligence can involve more quantitative insight such as market considerations or references.
- Controllers can help CFOs make focused judgments based on the best data available:
- Analytics for investment due diligence
- Appraising customer and competitor behavior, impact on costs to serve, margins and volume
- Comparison of strategic options with robust criteria
Is Your Organization Looking to Modernize the Controller Role
Whether you need an outsourced controller or CFO, Greenough Group’s consultants have extensive knowledge of the financial considerations of several industries and has provided value to early-stage startups and Fortune 500 companies alike. Our financial controller leadership can act as a full or part-time controller for your company, or aid your company during a transition phase to modernize your finance team’s processes.
When we started work with Gemini Mobile Technologies, the company was a fast-growing, “bootstrapped” business with emerging multinational operations. With significant market traction, Gemini needed to upgrade its financial systems, controls, and policies, as well as augment its internal staff.
We were initially brought in to provide interim accounting staff at Gemini’s US headquarters. Realizing that Gemini needed to update its financial and accounting systems, an experienced GCG fractional controller helped guide Gemini through a process that included:
- Specifying and managing the implementation of a robust ERP system that could accommodate Gemini’s international operations
- Managing the development of a multi-country internal finance and control staff
- Installing annual budgeting and periodic forecasting processes
- Bringing revenue recognition policies and procedures in compliance with GAAP
- Developing a project cost accounting system
- Planning and managing its initial and subsequent annual audits
- Supporting several major financings
- Assisting management in restructuring operations as business and market conditions required
“GCG’s executives don’t work like typical consultants; they integrate themselves into the company like they’re part of it. They’re deeply engaged in our business, take full responsibility, and we trust them completely,” said Michael Tso, Chief Operating Officer and Co-Founder of Gemini. Contact us for a free consultation today, and let’s talk about how our financial controller services can help drive growth and profitability for your business.