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What Does a Controller Do & When Does My Startup Need One? | Outsourced Controllers for Entrepreneurs

By May 18, 2023 No Comments

The entrepreneurs we work with often ask us whether they need a controller. The short answer is: not every business does!

Controllers play a pivotal role in empowering business owners to make informed financial decisions. They oversee everything from your accounting systems to your financial statements, while making sure that you’re operating honestly and properly with compliance systems and internal control policies.

But the truth is, not every company needs a financial controller. We’ll explore the role of a financial controller through real-world examples and help you understand when it’s time to consider hiring one for your business.

Throughout this article, we’ll cover:

What Is A Controller, and What Do They Do In Accounting?

A controller is your business’s financial officer, guiding you on money matters and supervising your bookkeeper. In simpler terms, they ensure your accounting operations run without a hitch.

But what does a controller actually do in accounting? Great, but complex, question. We’ll start with the simple stuff.

The financial controller role is multifaceted and dynamic, and their responsibilities depend on what your business needs, your company size, and your industry. Many times, controllers have expertise in several different industries, too, being a versatile asset for entrepreneurs.

For example, a controller working with a startup in the technology industry should be well-versed in subscription-based revenue models, churn rates, and customer acquisition costs. They’ll help you navigate the complexities of key metrics, keeping your SaaS startup healthy and ready for growth.

While areas of expertise can vary, controllers’ primary job duties tend to be similar across industries.

Let’s explore how adding a controller to your finance team could positively impact your startup:

Compliance with Financial Regulations

Controllers make sure your business follows all of the regulatory requirements. This includes local, state, and federal business regulations, such as tax laws and financial reporting requirements.

For example, a controller can help your startup stay on top of two of the more challenging aspects of a growing business: payroll and taxes.

All business owners get it – payroll processing only gets more complex as you grow. Controllers can help you with your payroll tax obligations, making sure you’re:

  • Paying employees accurately and on time
  • Withholding the right amounts
  • Timely reporting with the tax authorities
  • Making good budgetary decisions related to compensation, benefits, and workforce planning
  • Avoiding problems in the future with the right internal controls and systems for your payroll

Plus, regulatory compliance is super important for business owners. It keeps you out of hot water with fines, legal issues, and protects your company’s good name.

Budgets and Financial Transactions

Financial controllers play a critical role in managing annual budgets and monitoring transactions to optimize your financial position.

For instance, they can track your startup’s burn rate and cash runway, helping you put your money where it matters most and keeping spending in check, whether you’re launching new features or scaling your sales team.

Smart budget forecasting lets you zero in on high-impact areas, boosting cash flow, growth, and profits. Woo hoo!

what does a controller do

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Catch Up Bookkeeping

Say your startup’s financial records have fallen behind. A controller will step in to clean up those books, updating and organizing your accounting records, including critical financial statements.

If you’ve got a SaaS company, for example, a controller can help you reconcile deferred revenue accounts and accurately record software subscription revenue. This way, controllers ensure your numbers stay precise – including company tax filings, balance sheets, income statements, and other various financial statements.

Catch up bookkeeping is a big deal for business owners because accurate accounting books are the key to making smart decisions, securing funding, and staying on the right side of tax laws.

A Dedicated Controller for Accurate Books

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Accounting Processes and Compliance with GAAP

Controllers are like your company’s financial rule keepers, ensuring your entire accounting process closely follows the Generally Accepted Accounting Principles (GAAP).

Take an ecommerce business, for instance. A controller helps to keep the company’s financial records in line with GAAP, which can make things like getting a loan, attracting investors, or preparing for a sale much easier.

So, who needs to pay close attention to GAAP? Basically, any business with outside stakeholders.

Sticking to GAAP accounting standards is important because it creates a solid, accurate reporting framework that gives stakeholders confidence in your company’s financial health.

Additionally, if your company is not yet required to follow GAAP, it can still be beneficial. Following these rules can make financial comparisons easier and help set the stage for future growth or public offerings.

Simply put, GAAP is all about maintaining clear finances and building trust, paving the way for business success.

Cash Flow Maintenance

Financial controllers monitor and manage your company’s cash flow, helping you maintain a healthy financial position. Because without cash, you can’t really operate your business, much less a growing one.

For example, a controller can help your SaaS startup implement strategies to better manage cash flow, such as optimizing billing cycles, offering annual payment discounts, or shortening the sales-to-cash conversion cycle.

Healthy cash flow is crucial because it helps you meet financial commitments, invest in exciting growth opportunities, and decrease the odds you’ll face a detrimental financial crisis.

Performing Internal Audits

Controllers conduct regular internal audits, typically on an annual basis, to spot areas for improvement and reduce risks in your financial systems, while ensuring your company finances are accurate.

For example, an internal audit for your startup might uncover ways to cut down your customer acquisition cost (CAC) or boost your monthly recurring revenue (MRR) – in other words, new ways to drive growth and increase profitability.

Internal audits are a huge help for business owners because they offer valuable insights, uncover potential problems, and keep your company’s financial condition rock-solid.

As a financial professional, a controller’s got the know-how to spot and fix any financial hiccups and tackle tasks that might not be on your accounting team’s to-do lists. And as your business grows, a controller’s experience and guidance can become an invaluable asset to your financial team.

Plus, you can count on a more hands-free approach to managing your company’s finances with a controller in the mix.

Is There a Difference Between a Bookkeeper and a Controller?

Both bookkeepers and controllers are accounting professionals with distinct strengths and responsibilities. Together, they form a powerful piece of your accounting function.

Let’s break down the difference!

Bookkeepers are your everyday accounting personnel who manage routine aspects of accounting, like:

  • Recording and categorizing transactions accurately in your accounting software
  • Cash reconciliation
  • Accounts payable and accounts receivable
  • Keeping your accounting activities in order

In short, bookkeepers keep your financial systems running like a well-oiled machine. Having a reliable one can be a game-changer for busy entrepreneurs, freeing up your time from managing financial activity and basic accounting and allowing you to focus on growing your business.

On the flip side, controllers hold a more senior position, overseeing the entire accounting department, establishing company policies, and ensuring the efficiency and accuracy of systems.

They play a crucial role in financial strategy and are responsible for creating and maintaining internal financial controls to ensure accuracy, asset protection, and compliance with regulations.

Both bookkeepers and controllers are essential for a well-functioning finance team.

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Do I Need a Financial Controller for My Business?

As an entrepreneur, it can often feel like hiring a controller position is an unnecessary burden to bear, especially in the early stages.

Truth be told, controllers aren’t necessary early on. Some businesses can get by with just a bookkeeper and tax support. But, as your business scales and accounting skills become more complex, the need for a controller’s accounting background grows.

And we get it – paying for another accountant can feel like expenses are only going to pile up. But it doesn’t have to be expensive.

What would you say if we said that hiring an outsourced controller can actually save you money?

Yes, it’s true! We’ll take a deep dive into keeping financial controllership cost-effective later in this article.

As a rule of thumb, we recommend that our clients bring a controller on board when their business is experiencing rapid growth, exploring new opportunities, or struggling to meet financial deadlines due to increasing complexity.

Let’s look at two common scenarios for why you may need to hire a controller for your company:

1. You’re required to hire a controller by someone else.

You may be required to hire an accounting controller when you sign on to an agreement that requires U.S. GAAP financials.

What does that mean in layman’s terms? The most common agreements we see that require GAAP accounting are:

  • Preferred stock investment by a venture capital firm
  • Bank loan
  • SEC filer
  • Government or private grant
  • An agreement that requires U.S. GAAP explicitly
  • An agreement that requires an audit, review, or a compilation

2. You want more than your current bookkeeping is giving you.

Here are 3 common signs it’s time to upgrade your finance team with a controller:

Upfront payments. Upfront payments from customers can be great for your cash balances, but they can also distort your financial picture.

Say you receive a payment that’s supposed to cover 3 months or even a year of service or products. A controller can help manage this deferred revenue and ensure that revenue recognition is aligned with the actual delivery of goods or services, giving you a clearer picture of your financials.

Business scorecards. A business scorecard is a performance management tool that allows you to monitor and measure your company’s performance against key financial and operational objectives, making it easier to steer your business in the right direction.

Financial controllers can develop and update your business scorecard, helping you track key financial data for your industry.

Director of accounting. Maybe you have a bookkeeper or clerk, but you need to add more accounting oversight to your finance staff. An accounting controller is a strong leader who can answer any and all accounting questions appropriately for your team.

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What to Look for in a Controller: Qualifications

When it comes time to search for a controller, here are some things you should keep an eye out for:

1. Mastery of Finance and Accounting Best Practices: Look for a controller whose career shows extensive experience in finance and accounting, particularly in your industry. They should also be well-versed in Generally Accepted Accounting Principles (GAAP).

2. Savvy with Relevant Laws and Regulations: You’ll want to ask your prospective controller, “how do you stay up-to-date with the latest tax laws and regulations?”

Make sure that they’re committed to remaining knowledgeable and keeping your company compliant.

Imagine you’ve just received your first round of venture capital funding. A controller who’s current on the tax implications of different types of funding can help you maximize your funding and avoid any unpleasant tax surprises down the line.

3. Relevant Experience in Management: A controller isn’t just a number-cruncher, they’re the leadership. Look for someone with solid experience managing a team, and overseeing an organization’s accounting operations.

You want a financial advisor who can keep your team motivated, efficient, and focused on company financial goals.

4. Superb Financial Analyst: Company controllers need to be expert financial officers, able to dive deep into the numbers with valuable insights.

Try asking your prospective financial controller, “Can you give me an example of complex financial analysis that you performed, and how it influenced strategic decision-making within the organization?”

For example, if your tech startup is burning through cash faster than expected, a controller with sharp analytical skills can help pinpoint the source of the problem and suggest effective solutions.

5. Comfortable with Tech Tools and Software: Financial management is as much about tech as it is about numbers. Your ideal controller should be a whiz with financial software and core technology. If your SaaS startup uses specific subscription management or revenue recognition software, a controller familiar with these platforms could be a game-changer.

Even better, you can look for a controller who is ready to identify areas of improvement in your tech stack.

6. Excellent Communication Skills: Lastly, but certainly not least, a controller should possess outstanding communication skills. They must be capable of breaking down complex financial jargon into simple, understandable terms for all stakeholders. Whether it’s a team meeting, a report to the board, or a chat with you, the entrepreneur, clear and effective communication is key.

When evaluating a controller, you should also screen for active listening, clear written communication, a collaborative spirit, and presentation skills.

A successful controller should excel at being a great team leader, a problem-solver, and a tech-savvy financial professional. They’re a versatile asset who can guide your business through the financial challenges of growth and beyond.

Controller Education: Accounting Degrees and Certifications

In terms of career path, controllers come from diverse backgrounds and education. Most have a degree in accounting or a degree in finance as well as their CPA certification (Certified Public Accountant). Some also have alternative certifications or advanced degrees, such as Master of Business Administration or Certified Management Accountant.

When you’re ready to find someone to fill the controller job, we recommend looking for a controller who either has their CPA certification or a MBA. All of our controllers at Acuity fill one of these two educational requirements. These qualifications are important, because they equip controllers to:

  • Effectively manage your financials
  • Support the overall success of your business
  • Provide valuable input for important decisions

What’s in a Title for a Controller in Accounting?

While their title can vary – whether it be accounting controller, controller in accounting, business controller, financial controller, or director of accounting – these financial managers all have a couple main goals:

  • Helping your business maintain financial stability
  • Ensuring accuracy and efficiency in your financial operations

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What’s the Average Controller Salary?

So, you’re thinking about hiring a financial controller position for your growing business. That’s a big step!

Let’s talk money.

The average base salary for a full-time company controller can be anywhere between $120k to $140k a year. But remember, this is just the base pay. When you add in benefits and other goodies that make up the full compensation package, the total annual salary can really start to eat into your company budgets.

Before you hire full-time, let’s consider an alternative that could save you time, effort, and a lot of money: outsourcing your controller function.

In this tech-savvy world, it’s easier than ever to manage your financial processes without needing a full-time staff accountant or controller. This is especially true for startups that are still growing and haven’t yet hit the $5M in revenue mark.

Say goodbye to a hefty annual salary and hello to Acuity’s outsourced fractional controller services. By outsourcing, you can avoid shelling out above-average salaries for a full-time controller. And, you’ll just pay for the services you need.

This means you’re saving a big chunk of change. Plus, you’re freeing up time that you can use to focus on growing your business.

Outsourced controllers can save you money in other ways, too

In addition to being more cost-effective than an full-time hire, working with a fractional controller can help your business save through:

1. Scalability. As your business grows or experiences fluctuations, an outsourced controller can easily adjust their services to match your needs, saving you from over-hiring or struggling to find additional resources during busy times.

2. Expertise. Outsourced controllers typically have professional experience across various industries and can quickly identify best practices, potential cost savings, and process improvements. Their broad knowledge can help you make better financial decisions and avoid costly mistakes.

3. Time savings. By handling complex financial tasks, an outsourced controller frees up time for you and your team to focus on core business activities, increasing overall productivity and efficiency.

A lot of Acuity’s clients have seen these benefits and decided to add a part-time controller to their bookkeeping plan. This gives them the financial oversight they need without the full-time commitment.

Ready to Outsource? A Dedicated Controller for Your Startup

At Acuity, a dedicated controller isn’t just another service – it’s a partnership. By dedicated, we mean one go-to accountant, who knows the ins and outs of your startup and industry.

And again, you’re assigned a real person who’s there for you, readily available via email, Slack messages, or video calls. After all, it’s the personal touch you deserve!

Our controller services, priced at $135 per hour, offer you flexibility. Many clients opt for monthly reviews covering everything from month-end procedures to payroll tax. And the best part? You only pay for what they need.

So, what else sets Acuity apart? We are a powerhouse in outsourced financial services, unlike some of our competitors that don’t offer comprehensive controller services.

Plus, we offer the stability of a well-established firm, free from the pressures and uncertainties of venture capital funding.

Quite possibly, though, the real Acuity difference is our approach. We’re a tech-forward company, balancing cutting-edge technology with the human touch.

We believe in personalized service, so we’re always here for you to lean on. In choosing Acuity, you’re not just getting an accountant, you’re gaining a partner.

Acuity’s Dedicated Controller Service:
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Frequently Asked Questions

What is a dedicated controller? Am I going to know them personally?

Yes! A dedicated controller means that you will work closely with one controller from our team who knows your startup and your industry.  No more bouncing around between people and starting over each time.

What's the difference between an accountant and a controller?

At Acuity, we use these terms interchangeably.

Generally speaking, though – all controllers are accountants, but not all accountants are controllers. The controller’s role is a step up, incorporating management and strategic responsibilities along with standard accounting tasks.

Controller vs CFO – What does a controller do vs a CFO?

This really depends on the controller! Like we mentioned earlier, the controller education and experience can vary a great deal.

Some controllers have greater ability to perform review of overall financial health and provide more broad financial advice, like CFOs. Additionally, the controller and CFO roles may overlap in some companies.

However, in larger organizations with distinct positions, the CFO typically helps to shape the company’s financial direction, make big financial decisions, and work on securing funding, while the controller typically focuses on routine accounting duties, reporting to the CFO.

What is a comptroller? What does a controller do vs. a comptroller?

The primary distinction between a comptroller and a controller lies in their respective industries.

A comptroller is a financial role typically found in government entities or universities. Their responsibilities are similar to those of a controller, but the setting and focus is different.

Both roles encompass financial management, reporting, and ensuring financial compliance.

How do you know when you need an outsourced CFO vs. a controller?

Determining whether you need an outsourced CFO or a controller depends on the specific needs and growth stage of your business.

If your business needs more sophisticated financial reporting, improved compliance, or better management of your accounting team, then an outsourced controller could be a good fit.

On the other hand, if you need someone to help plan the financial future of your business, manage financial risks, or get funding, then a CFO might be a better choice. They work closely with company leaders, looking at the bigger picture for your company strategy.

Also, if your business is scaling rapidly, facing complex financial challenges, or preparing for significant events like mergers, acquisitions, or an initial public offering (IPO), you may want to look into an outsourced CFO for long-term financial strategy.

Why do I need a controller for accrual based accounting?

Accrual accounting records income and expenses as they happen, not when cash changes hands. This can be complex. A controller ensures everything is tracked correctly and on time. They help make your financial reports accurate, supporting informed decisions and making sure you follow rules and regulations.

Why do I need a controller to clean up my books?

A controller is like a specialist who keeps your financial records tidy and accurate. They fix errors, ensure all transactions are recorded properly, and create a system for ongoing accuracy. This gives you reliable financial information, which is important for your business to grow and meet legal requirements.

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