CFO vs Finance Director vs Controller: What’s The Difference
There is often a confusion in the designations of a CFO vs Finance Director vs Controller. In this article, we look at how these designations and roles are different from each other.
The terms CFO, finance director and controller are included in the finance team in the business world. These three positions are a very important part of a company. They jointly perform economic and administrative functions and become three of the most important positions that handle a company’s finance role. Now, let’s take a closer look!
CFO vs Finance Director vs vs Controller
Before we get started, let’s find out about each term above.
1. Chief Financial Officer
CFO or Chief Financial Officer are senior executives who direct the finances of a company. CFO manages the company’s cash flows, financial plans, identifying the company’s strengths, evaluating the weaknesses of its finances, etc. The CFO is one of the most important and highest positions in the company included in the C-suite. The other C-suite positions are CEO (Chief Executive Officer), COO (Chief Operating Officer), and CMO (Chief Marketing Officer).
The CFO is not just responsible for preparing financial statements — instead, the CFO analyses financial trends, identifying opportunities, reducing costs, as well as identifying threats to the company. Not only that, CFO ensures that all financial decisions are made well. CFO supervises diverse finance/accounts teams, as well as oversees the business’s overall performance.
CFO reports directly to the CEO or the Board in most cases, but they remain one of the highest positions in the company. In the financial industry, the CFO is in the highest position. CFO is often assigned to help CEO make forecasts, do cost-benefit analyses, or track revenues and expenses.
2. Director of Finance or Finance Director
Finance director is often called the CFO’s primary accountant, which means they provide any financial information to help the CFO make decisions. Finance directors work to make sure that the finances of an organization are strong. They also assist their subordinates to be more productive to help the company grow.
A finance director works with the Chief Financial Officer (CFO) to plan the finances of an organization. This includes reviewing the finances of each department, analyzing budgets, etc., to determine the current needs of a company.
Finance directors report directly to the CFO. Their main responsibility is to provide the important financial data that allows the company’s executives to make business decisions.
Controllers, or sometimes knowns as financial controllers, are the people responsible for the accounting activities in a company. They are included in the accounting department, along with several other important positions, such as accounts receivable and accounts payable. Their main responsibility is managing accounting of the company.
Controllers handles the preparation of various reports, including accounting financial report, income statements, balance sheets, forecasts, etc. Finance controllers act as the key point of contact for the auditor. They also oversee all aspects of accounting in a company. They also make sure that accounting transactions are managed correctly, so that accurate financial records are maintained.
Controllers are high-level finance people who are responsible for preparing financial reports. Although not considered an executive position, controllers supervise many of the processes necessary to produce an accounting statement. Controllers work closely with audit teams, assist managers with budget preparation, identify opportunities to cut costs by working with suppliers, build partnerships with customers, etc.
Finance Team Hierarchy
Now that we’ve seen the responsibilities of CFO vs Finance Director vs Controller, let us look at their respective hierarchies. The biggest difference between CFO, FD and Controller is their place in the corporate hierarchy. The CFO is basically the head of the finance department. They are one of the highest positions in the entire company, alongside other executives like CEO, COO, and CIO.
The Finance Director acts as the chief accountant for the CFO. Finance Directors are the people who provide the CFO with the most accurate information that allows them to plan the company’s growth.
Meanwhile, The Controllers are responsible for the company’s financial statements, ensuring that the accounts are closed on time, maintain excellent records, and manage its cash flow.
Roles and Responsibilities
The CFO oversees departmental goals, finances, budgets, investment decisions, etc. They also monitor the economy, the company’s projects, plans for future investments, analyze competitors, etc. As part of their duties, the CFO manages the company’s financial resources, as well as supervising all finance personnel. Their aim is for the company to plan its finances strategically, to grow the company by providing them with the funds, as well as to find new customers.
CFO handles the company’s overall finances, which include the historic accounting processes, as well as future activities, such as budgeting, forecasting, cash flow, mergers or investments. CFOs are the first people that CEOs turn to for advice. Many of them handle things that go beyond financial reporting, such as establishing new alliances, analyzing new technologies, or preparing reports that deal with complex business issues.
Finance directors are responsible to direct the company’s finance functions. Their reporting responsibilities include analyzing company statements, running monthly balance sheets, analyzing profit/loss statements, determining loan rates, establishing credit facilities etc. Finance directors work hard to build a strong foundation based on what a company can do to ensure that its financial operations are sound. They help their companies make excellent decisions based on the financial information that is provided by their companies, such as looking over their balance sheets, or looking at statements that show how much money is in the company.
Meanwhile, controllers are charged with the responsibility of ensuring the accuracy of financial records. They oversee the various aspects of accounting in a company to ensure that the books are maintained correctly. It is the role of the controller to plan the finance activities of a company, set up internal controls, etc.
The Difference – CFO vs Finance Director vs Controller
Although Chief Financial Officer, finance director and controllers oversee the same sector in the company, these three positions certainly have differences. This allows them to be stand-alone even though they are still related. Let’s take a look at their differences.
1. The hierarchy or position
First, as mentioned above, the biggest difference between CFO, finance director, and controllers is the hierarchy itself. The CFO is in the highest position, almost the same as the CEO. Even though the CFO reports their job directly to the CEO, they still have the same position as the executive of the company.
In the financial field, the finance director is under CFO. They’re not part of the executives, but they are still one of the senior managers of the company. Finance director reports directly to the CFO daily.
Meanwhile, the controllers are under CFO and finance director. Some companies don’t have a financial director, so in that situation the controller is under the CFO directly. When there is a finance director, the controller reports to them for every task they do. Thus, simply, the CFO is at the highest position among these three, followed by the finance director, and last, the controller.
Second, the difference between CFO, finance director and controllers is about their experience level. CFO should have over 20 years’ experience in the financial areas, since they handle one of the most important tasks. Commonly, a CFO has between 8-10 years of experience as a financial analyst at a company. This is a really good way to show that in order to be successful in a company, all the employees need to have skills, knowledge, and experience.
On the other hand, finance directors may need 5-10 years of experience in the role of administrative or financial manager. Meanwhile, the controllers should have at least 3-5 years’ experience in the accounting field. This is because the controller should be able to perform all kinds of complex tasks, such as making payroll or performing other types of accounting.
The third difference between the three positions above is about the realm of responsibility. CFO and controller have opposite scopes of roles regarding their duties and responsibilities. The CFO focuses on corporate strategy in the financial field. They are the highest decision-makers on everything related to the company’s financial sector, both in the present and in the future.
Then, the controller focuses more on the company’s tactical responsibilities, such as working on accountant tasks, preparing financial statements, and so on. Meanwhile, the financial director is somewhere in between. Their jobs are more likely to analyze department budgets, handle internal conflict, but also prepare the financial reports to the CFO. Thus, the financial director performs both tactical and strategic tasks about the company’s finances.
4. Task Scale
The CFO, in particular those of publicly listed companies, needs to have complete confidence that their subordinates are good. They also need to spend more time analyzing the business opportunities in the external arena. The CFO constantly looks for partnerships, investments, acquisitions, or market trends. It means a CFO has mostly responsibilities that involve dealing with an external scale.
Meanwhile, financial directors and controllers are directly involved in implementing internal controls that protect companies’ assets, such as detecting errors in business processes, ensuring compliance with legal requirements, etc. Hence, finance directors or controllers have become deeply embedded in the organization’s procedures/workflows, or in the simple way, dealing with an internal scale.
The fifth difference between CFO, finance director and controller is about the focus of their duties or their experts. The three actually have slight differences in their respective responsibilities.
The CFO focuses on handling the finance department, meaning they focus on managing the company’s finances. This includes finding the flow of funds through investors and managing them in order to make a profit in the future.
Meanwhile, finance directors and controllers focus more on working on accounting tasks. They will more often take care of financial records, track revenue and expenses, and so on.
CFO, finance directors, and controllers each have different duties in the company. Although they have different scales and levels, the three of them still handle the same sector. It is impossible if these three positions are not related to each other. Instead, they will always be connected so that financial management in the company, both internal and external, is maintained properly and controlled.
There are many common similarities in the roles of CFO, financial director, and CFO. That is why companies frequently combine their functions. Although similar roles are often combined, there are differences among these three positions. Being able to discern the different roles of each one is useful when deciding which expert is best suited to what a company needs, or if all of their roles are needed.