CFO and Controller are Titles Associated?

The chief financial officer CFO is a senior executive responsible for planning and managing a company’s finances and financial activity. They are an integral part of the company’s machinery, essential for proper functioning. They report to the Chief Executive officer (CEO), but they, in many cases, have a seat at the board.

What does their job entail? 

As the name suggests, CFO is the highest-ranking financial position in a company. They manage a company’s finances and financial activities, which are as follows.

1. Financial Planning – It is a step-by-step approach to estimating the capital required for company policies and strategies.
2. Management of Financial Risks – Risks in the financial sector can be broadly categorized in four categories, they are,
   1. Market Risk – It refers to the possibility of loss which is associated with every investment, due to the factors which affect their overall performance in the financial market. They are also known as systematic risks.
   2. Credit Risk – It refers to the possibility of was borrower’s failure to repay the principal amount and the interest owed to the lender/entity which may lead to obstruction in cash flow.
   3. Liquidity Risk – It occurs when there is a failure to meet short-term debt obligations. When for a certain period, given security or financial asset cannot be traded in the market without it having an impact on the financial market.
   4. Operational Risk – It is the risk of change in value caused when the actual losses for failed internal processes, people, control, systems, or external events differ from the expected losses.
3. Record Management – It means keeping track of a company’s cash flow, how the income and expenses are managed.
4. Decision Making – After analyzing the risk factors, they decide when and where to invest the company’s funds in order to make the financial condition profitable or stable.
5. Financial Reporting – It refers to the accurate and timely presentation of financial information to the Board or CEO because many important decisions are made based on the data provided by them.

A CFO is not just the head of a company’s financial department, but they also oversee several departments such as budgeting, accounting, and auditing. They also maintain business relations with investors for their continuing investments and support, potential investors to persuade them, bankers to create a line of credit, and other financial institutions that may be useful. 

They are a catalyst in negotiations with the said entities. They work closely with the CEO in devising corporate strategies and oversee the capital structure. In addition to financial activities, they adhere to Generally accepted accounting principles set up by the Securities and Exchange Commission and other regulatory institutions.

Qualifications of a CFO

CFO’s generally have a strong academic background, a bachelor’s degree in finance, Economics, Business or Accounting, a master’s degree in business administration, accounting, public administration, financial analysts or financial managers, or have passed the examination for Certified Public Accountant (CPA). It is a competitive career; therefore, extensive work experience in the finance department of a company, leadership skills, decision-making capability, and management skills. A minimum of 8-10 years of experience in a senior role is preferred.

Frequently Asked Questions 

1. What makes a good CFO? Knowledge, broad vision, big picture thinking, confidence, adaptability, and leadership are a few of the qualities that are seen in a good CFO.
2. How do you prepare for a CFO interview? The first question is an opportunity for a positive impression. Talk about the skills, quality, strengths, and passion you have for the position. It is important to talk about how you can be a valuable addition to the company or institution.
3. What should a new CFO do first? Prioritize. This means in the first 90 days of assuming the position, a CFO should form relationships, understand the present situation, and set the agenda.
4. How much does a CFO get paid? The annual salary, on average may vary based on a number of factors but according to salary.com, the median compensation for a CFO as of May 2021 was $393,377
5. What is the average age of a CFO? According to statistics, in 2018, the average age of a CFO was 48 years. Since 2005 average age for the position of CFO has been trending upwards.

CFO is an important executive position in modern-day corporations. It is a position of power and respect and comes with great responsibilities. Some such great, successful, and inspiring CFOs are Bob Shanks- Ford, Carol Tome’ – Home Depot, Anthony Noto- Twitter, Dave Wehner – Facebook.

Financial Controller

A financial controller oversees a company’s accounting function. In different sectors, the title is changed to the comptroller. It is an important and senior role in the company, and they report to the financial director or the chief financial officer. They ensure that the company’s accounting function runs smoothly and all the accounting records are kept appropriately. Financial controllers are typically present in small companies, and they are the head of the financial department. Still, in companies of a larger scale, there is a CFO above the controller. 

What does their job entail?

The functions may vary with sectors and scale of the company, but the following are a few examples.

1. Coordinating and directing quarterly/annual budgets and forecasts.
2. Taking part or having a say in the hiring and training of the accounting staff.
3. Overseeing the cash flow and debt collection.
4. They are not only responsible for calculating the top and bottom line but for meeting tax requirements, licensing requirements, and permits.
5. Creating policies and setting up accounts.
6. They are involved in balancing the books at the end of the fiscal quarter.
7.  They have an important role in a company’s decision-making process and devising financial strategies.
8. Keeping track of the money that has been loaned to borrowers and payments received from the clients or customers.
9. The controller establishes, monitors, and enforces control over financial reporting.
10. One important task is to monitor change in legislation which may impact the company’s operations and taxation.

As mentioned earlier, the role of financial controller is valuable, and they are found in almost every business and organization of no matter the scale and sector.

Qualifications of a Financial Controller

At the minimum, a bachelor’s degree in accounting, finance, or business administration. Some employers may require a master’s degree in similar fields, as a master’s degree will provide extensive knowledge and complex problem-solving instructions in finance and accounting, which help an individual in developing strong leadership skills and decision-making capabilities. In addition, a strong background or minimum of 5-year experience in financial management is generally helpful. Certified public accountant credentials, chartered financial analyst certification, and certified management accountant certification are not typically required but are generally preferred in a career as a controller. Academic qualifications for controller and accountant are the same but financial controller being a leadership position requires certain extra skills. These skills include problem-solving, analytical thinking, organizational skills, and team management skills.

Frequently Asked Questions

1. How much do financial controllers earn? According to the bureau of labor statistics, as of May 2019, the median annual income of a financial controller, listed as a financial manager is $129,890. Controllers at fortune 500 companies are on the 50% side of the graph who make much more than this.
2. Financial controller or financial manager, which is a higher position? The answer is the financial controller. The controller is responsible for managing finance managers while a finance manager can be promoted to senior finance manager.
3. Is a financial controller the same as an accountant? An accountant keeps, maintains, and analyzes the company’s financial records whereas a controller oversees the accounting operations.
4. What is the difference between a chief financial officer and a financial controller? A CFO is a leader and oversees the whole financial department whose tasks include planning, forecasting, and strategic partnership with the CEO whereas a controller is responsible for reporting and compliance.
5. What level position is of a financial controller? Financial controller is a high level and valuable position in a company and the holders of this position are generally from a financial, accounting or management background.
6. Are the Financial controllers and comptroller the same? Their functions associated with the position are essentially the same in the U.S, but there is a difference in their functions in the European market.
7. Is it hard to be a financial controller? The job is stressful but fruitful, it is a difficult position to attain because it demands many years of prior experience. The salary package is good and while holding the position there is a chance of further growth and success in the field of finance.
8. How do you prepare for an interview for the financial controller position? Make sure to speak to the needs of your potential future boss and how you will be a valuable addition to the firm. With every question emphasize the fact that you will be able to meet multiple or conflicting deadlines because you’ve done so in the past efficiently and are looking forward to new challenges.