Having a controller is fairly standard for major corporations and large enterprises. But at small and medium-sized businesses? Not so much.
Understandably, it’s rather uncommon for smaller enterprises to use an outsourced controller, and even more rare to employ an in-house controller. There’s often neither enough work nor sufficient available resources to hire a qualified, full-time expert.
Since it’s rare for small and medium-sized enterprises to have a controller, you might be wondering how using an outsourced controller can help you, and what you should expect from an outsourced controller?
But first, let’s take a look at what a controller is and what they do.
What Is a Controller?
Controllers are versatile and often fill a variety of roles within the finance organization.
Typically, the individual is responsible for all accounting-related activities, including:
Planning, budgeting, and forecasting
Accounting systems and internal workflow process design
Interpretation of financial reports and KPIs
Reducing fraud through internal controls
Liaising with bookkeepers, tax preparers, banks, or venture capital financiers
They might also be involved in payroll and cash planning systems
In addition to reporting to the CFO and overseeing the company’s financial health, the controller might also be responsible for staffing and training other finance department staff.
Essentially, controllers help keep the finance side of the business running smoothly by ensuring robust systems and supporting the management team to make data-driven decisions.
Why Should You Hire a Controller?
Modern businesses generate large amounts of data and information. But without someone to analyze that data and distill the key concepts, helpful information goes unnoticed and underutilized.
Good controllers tend to be experts at sifting through data and can aid a company in implementing robust processes to ensure consistent and accurate reporting.
Often, controllers are initially brought on board during a crisis or to solve specific problems in the organization. It could be that the company has inadequate financial processes or poor financial record-keeping that needs to be addressed.
Maybe the issues are more operational in nature and the company is facing insufficient cash flow and needs to figure out where to plug the leaks.
Issues like these are especially common after companies have gone through rapid growth phases or acquisitions.
You should expect a controller to help you sort those issues out.
However, while controllers are often brought on to solve problems, they can also be beneficial in less critical situations. If company leadership is considering major structural changes to the business, a controller can help ensure they make the best decision for the business.
Situations like:
Taking on investors
Getting a loan
Investing in assets or acquiring other companies
Or, defining an exit strategy to sell or go public
can also benefit greatly from input from an outsourced (or in-house) controller. Even without the intent to make major structural changes, a controller can help you keep your finances in order year-round.
Should You Outsource, or Hire in-House?
There are a host of good reasons both for and against hiring an outsourced controller. Many companies, especially smaller organizations, tend to prefer an outsourced controller at the outset for a variety of reasons.
Outsourcing can be beneficial when:
Attempting to solve a temporary problem. Preparing to raise capital or going through an acquisition are temporary issues best solved by hiring an outsourced controller.
Not enough work for one person. Typically, insourcing requires hiring a full-time employee. A smaller business may not have enough work to keep one person busy full time. This wouldn’t be fair to the person or the business to pay full time and only need a fraction of the person’s time and effort.
Shorter hiring process and ramp-up phase. Because you’re engaging a service, there’s no need to wait until a controller you would be hiring leaves his or her current job.
Can be less expensive. When outsourcing, you’re only paying for the work that’s done. You’re not directly on the hook for the controller’s full-time salary, benefits, and bonuses.
But outsourcing isn’t without drawbacks:
You may unintentionally hire an inexperienced partner. When engaging an outsourced controller, you place a fair amount of trust that he or she knows what they’re doing. If not, it could lead to negative impacts on your business. You need someone who understands what they’re doing and can provide you with high-quality, timely results.
An outsourced controller may be hard to find. Although outsourced and fractional CFOs and controllers are becoming more mainstream, they’re not everywhere yet. Many accounting firms still only offer bookkeeping with a limited amount of advisory services.
It’s not a hands-off solution. A good outsourced controller can absolutely provide valuable advice. But you will need to do some of the work. Learn how to use the reports and insights provided by the controller, otherwise, you’re wasting your time and resources.
Partner with SIMPLY Financials PLUS
The point is, good controllers are versatile and can fill a variety of financial roles in your business.
Hiring a controller doesn’t have to be a major headache. Consider partnering with SIMPLY Financials PLUS and using our Outsourced Controllership-level and CFO-level services to fill any gaps you have in your financial team and gain financial peace of mind.