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Understanding your company’s finances is key in being profitable and successful. Most emerging companies understand this at a basic level and monitor their books or hire a bookkeeper, and that’s a good start. However, as a company grows, the overall needs for protecting it financially grow as well. Whether you’re at a point where you’ve decided you’ve outgrown your current bookkeeping practices or you’ve been informed by a lender/ government agency/ other parties that you need to add a financial controller, you’ll learn the basics of getting established below.
What Does a Financial Controller Do?
Larger companies tend to have full accounting departments, with each individual performing different duties to support the organization’s goals, and in line with the agenda of the CFO. Smaller companies generally start with having just one or two people that handle all of the finance work. For example, you may now have a CFO who oversees everything. You may have an accounting manager who oversees payroll as well as accounts payable and receivable, and each of those could or possibly should be overseen by a different person. Too few people also raises the issue of internal control weaknesses due to the lack of proper segregation of duties. This is how companies can get stolen from (and/or where and when embezzlement occurs). Your business’ needs will vary based on its size and what skills each professional brings to the table. In a larger enterprise, the financial controller sits below the CFO and oversees the accounting and analyst duties, but controllers may take on general accounting manager duties for a smaller company as well.
Establishing and Executing Internal Controls: One of the financial controller’s primary duties is to establish a system of checks and balances. Records are kept organized and readily available. This should be designed to prevent inaccurate reports to the management (and/or CEO) and employee fraud or defalcation (stealing). The controller also has to ensure that the controls put in place are being followed and are working as designed.
Payables & Receivables: Invoices that need to be paid are reviewed and approved when appropriate, while accounts receivable are monitored and aging reports are tracked and followed up on. Bank reconciliation and disbursements are included in the duties too. In smaller companies, the controller may take care of processing payables and receivables as well.
Payroll: Whether payroll is handled by an internal person or a third party, the controller establishes guidelines and protocols for the processes. Like other payables, payroll may also be managed entirely by the controller.
External Coordination: The financial controller also coordinates with other external financial professionals that the organization contracts with, such as auditors and tax preparation specialists.
Overseeing All Banking and Treasury Activities: In addition to handling the internal controls, the financial controller oversees all banking and treasury (cash flow) activities.
Negotiations: Most all financial contracts are negotiable, and even those that are determined in advance should be scrutinized to determine if accepting the terms is in the business’ best interests. This includes everyday things, like vendor agreements and lines of credit, as well as things that require occasional review, such as insurance policies.
Reporting: Preparing financial statements, balance sheets, cash flow reports, budgets, budget-to-actuals and financial projections are all on the controller’s to-do list.
Analysis: As an expert in the company’s finances, and being the one who maintains records to ensure accuracy, the controller handles in-depth analysis as needed and offers an expert opinion on all financial matters.
Intermediary: The controller keeps the executive management team aware of any financial developments and provides them with the information they need to make effective decisions. Depending on the company structure, collaboration may also be involved.
Contact Us for Personalized Assistance
At Credo, we offer a wide variety of accounting services to suit the needs of businesses of all sizes. If you’re not getting the results you need using your present system or feel like your accounting department has room to grow, we can help. Contact us and tell us about your needs today.
He has accrued broad financial experience working with companies ranging in revenues from $50,000 to $60 billion.Dan has worked with technology services, software, real estate, retail, manufacturing companies, professional services firms, marketing/advertising agencies, dental practices, medical practices, and various other industries, providing each with the specific financial guidance needed to establish sustained business growth and financial health.