For many business owners, evaluating a CFO or controller can be difficult.

You may know that both roles are responsible for important aspects of your company’s financial management, but their responsibilities are not identical. A controller generally focuses on the accuracy, organization, and integrity of the company’s accounting and financial reporting. A CFO typically takes a broader, more strategic view, using financial information to help management plan, forecast, evaluate opportunities, and make important business decisions.

So how do you know if your CFO or controller is doing a good job?

The answer depends partly on the role, but both should help create a financial function that is accurate, organized, timely, and useful to the business.

What Should You Expect From a Controller?

A controller is generally responsible for the company’s accounting and financial reporting function.

Depending on the size and complexity of the business, a controller may oversee the accounting team, manage the monthly close process, review financial statements, maintain accounting policies and procedures, oversee reconciliations, and help establish internal financial controls.

A well-functioning controller should help ensure that your financial records provide a reliable picture of what is happening inside the business.

Key areas to evaluate include:

  • Accuracy and timeliness of financial statements
  • Account reconciliations
  • Monthly and year-end close processes
  • Accounts receivable and accounts payable processes
  • Accounting policies and procedures
  • Internal financial controls
  • Financial reporting
  • Organization of supporting documentation
  • Coordination with tax professionals and auditors
  • The overall reliability of the company’s accounting information

A controller does not necessarily need to be the person performing every accounting task. In a larger organization, much of this work may be performed by an accounting team under the controller’s supervision.

What Should You Expect From a CFO?

A CFO typically operates at a more strategic level.

While a CFO needs to understand the company’s accounting and financial reporting, the role generally extends beyond maintaining accurate books. A CFO uses financial information to help management understand where the business is going and make better decisions about its future.

Depending on the company, a CFO may be responsible for:

  • Financial forecasting
  • Cash flow planning
  • Budgeting
  • Profitability analysis
  • Key performance indicators (KPIs)
  • Financing and capital decisions
  • Growth planning
  • Evaluating major investments
  • Scenario planning
  • Risk management
  • Business valuation and exit planning
  • Strategic financial advice to ownership and management

The specific responsibilities will vary depending on the size and complexity of the business.

For a small or midsize company, a CFO may also work closely with the controller or accounting team to make sure the financial information being used for strategic decisions is accurate and reliable.

1. Your Financial Statements Are Accurate and Timely

This is one of the most important areas to evaluate for a controller and an important foundation for a CFO.

Your balance sheet, income statement, and other financial reports should give you a reliable picture of what is happening in your business.

Financial statements that are consistently late, contain unexplained discrepancies, or require significant corrections may indicate that your accounting processes need attention.

A controller should generally be accountable for ensuring that the underlying accounting process produces reliable financial information.

A CFO, meanwhile, should understand the financial statements well enough to identify significant trends, risks, and opportunities and use that information in planning and decision-making.

2. You Understand Where Your Business Stands Financially

You should not have to be an accountant to understand the basic financial health of your company.

Your controller should be able to help ensure that your financial reports are understandable and accurate.

Your CFO should be able to take that information a step further and help explain what it means for the business.

You should be able to get answers to questions such as:

  • How much cash do we have available?
  • How profitable are we?
  • Which parts of the business are most profitable?
  • Are our expenses increasing faster than revenue?
  • How much do customers owe us?
  • What bills and other obligations are coming due?
  • Are we generating enough cash to support our operations?
  • How are we performing compared with our budget or forecast?

The controller’s role is generally centered on making sure the information is accurate and available.

The CFO’s role is generally more focused on interpreting that information and helping management determine what to do with it.

3. Your Accounting and Financial Processes Are Organized

Good financial management starts with a solid accounting foundation.

Your accounts should be properly reconciled, transactions categorized appropriately, accounts receivable and payable monitored, and supporting documentation maintained.

Your financial records should also be organized enough that another qualified professional could step in and understand what is happening without having to reconstruct months or years of activity.

This is particularly important during tax preparation, an audit, financing, a change in ownership, or the sale of a business.

A controller should play a central role in establishing and maintaining these processes.

A CFO should also be aware of whether the accounting infrastructure is strong enough to support the company’s growth and financial decision-making.

4. Your Cash Flow Is Being Actively Monitored

Profitability and cash flow are not the same thing.

A business can report a profit and still experience cash shortages. That’s why cash flow should be actively monitored.

A controller may help provide accurate information about accounts receivable, accounts payable, cash balances, and upcoming obligations.

A CFO typically takes a broader view by using that information to forecast future cash needs and help management plan accordingly.

Depending on the business, this may include:

  • Cash flow forecasting
  • Monitoring collections
  • Managing working capital
  • Planning for large expenditures
  • Evaluating debt payments
  • Identifying potential cash shortages
  • Planning for periods of lower revenue

You shouldn’t have to discover a significant cash flow problem after the money is already tight.

5. Your Financial Reports Help You Make Better Decisions

Financial reporting shouldn’t be an exercise in simply producing numbers.

For a controller, the priority is generally making sure the numbers are accurate, consistent, and useful.

A CFO’s focus should extend to using those numbers to help management make decisions.

For example, if you’re considering hiring several employees, opening another location, purchasing equipment, increasing inventory, or taking on new debt, your CFO should be able to help you understand the potential financial impact.

A strong financial function turns accounting data into information that management can actually use.

6. You Have a Budget and Financial Forecast

Historical financial statements tell you what already happened. A budget and financial forecast help you plan for what comes next.

A controller may help prepare and monitor the budget and provide the underlying financial information needed for forecasting.

A CFO will typically take a more active role in using budgets and forecasts as management tools.

Depending on your business, this may include:

  • Annual budgets
  • Rolling forecasts
  • Cash flow projections
  • Revenue forecasts
  • Expense projections
  • Hiring plans
  • Capital expenditure plans
  • Debt repayment projections

The value isn’t simply in creating a forecast. Your financial team should compare actual results against expectations and help explain significant differences.

7. Financial Problems Are Identified Before They Become Emergencies

One sign of an effective financial function is the ability to identify problems early.

A controller may identify issues in the accounting records or reporting process, such as an unusual balance, overdue receivables, or an unexpected expense.

A CFO should generally look more broadly at what those issues could mean for the business.

For example:

  • Customer collections are slowing down.
  • A particular product or service is becoming less profitable.
  • Operating expenses are growing faster than revenue.
  • Inventory levels are tying up too much cash.
  • Debt payments could create future cash flow pressure.
  • A major expense is approaching that hasn’t been adequately budgeted for.

The goal isn’t to eliminate every financial problem. Businesses inevitably encounter unexpected challenges.

The goal is to identify important issues early enough that you have options.

8. Your CFO or Controller Communicates Clearly

Financial expertise doesn’t help much if financial information isn’t communicated effectively.

A controller should be able to explain accounting and reporting issues clearly and answer questions about the company’s financial records.

A CFO should be able to communicate the broader financial implications of those numbers to ownership and management.

You should feel comfortable asking questions and getting understandable answers.

If financial information is consistently overly complicated or difficult to understand, your financial reporting process may not be serving the business as well as it could.

9. Your Business Has Appropriate Financial Controls

Good financial management isn’t only about reporting and forecasting. It’s also about protecting the company’s assets.

Your controller and CFO should understand the importance of appropriate internal controls around areas such as cash, bank accounts, payments, payroll, purchasing, and financial reporting.

One important concept is segregation of duties.

For example, depending on the size of the organization, the person responsible for recording transactions may not also be the person approving payments or reconciling the bank account.

Similarly, a CFO or controller does not necessarily need to have unrestricted control over company bank accounts simply because they oversee the company’s finances.

The appropriate level of access and control will vary depending on the organization’s size and structure, but separating responsibilities can help reduce the risk of errors, fraud, and unauthorized transactions.

For small businesses where having multiple employees involved in financial processes may be difficult, an outside accounting professional, controller, or CFO can sometimes help design practical controls appropriate for the organization.

10. You Can Get Straight Answers to Important Financial Questions

Ultimately, one of the simplest ways to evaluate your financial leadership is to consider how effectively your team can answer important questions about the business.

If you ask:

“Can we afford to hire these employees?”

“Can we afford to take on this debt?”

“Why did our profit decline this quarter?”

“Which parts of our business are most profitable?”

“How much cash will we have three months from now?”

“Are we on track to meet our goals?”

You should be able to get answers based on reliable financial information and reasonable analysis.

The controller should be able to provide or validate much of the underlying financial information.

The CFO should generally be able to take that information and help you understand the potential financial implications of different decisions.

The answer doesn’t always have to be “yes.” In fact, effective financial leadership should sometimes identify when a decision carries more financial risk than it initially appears.

What matters is having the information and analysis necessary to make an informed decision.

What If Your Business Finances Aren’t Well Organized?

If you’re uncomfortable with the state of your company’s finances, you don’t necessarily need to replace your CFO or controller.

The first step may be determining where the problem actually exists.

For example, you may need to improve:

  • The accuracy or timeliness of your financial statements
  • Account reconciliations
  • Financial reporting
  • Cash flow forecasting
  • Budgeting and forecasting
  • Accounts receivable collections
  • Accounts payable processes
  • Internal financial controls
  • Communication between accounting and management
  • The overall organization of your accounting function

Start With an Assessment

Before making a major change, consider having an experienced accounting or financial professional review your existing processes.

An assessment can help identify whether the problem is primarily related to bookkeeping, accounting processes, financial reporting, internal controls, cash flow management, or higher-level financial strategy.

Clean Up the Accounting Foundation

If the underlying books aren’t accurate or current, strategic financial analysis becomes much more difficult.

Getting accounts reconciled, transactions properly categorized, and financial statements current can provide a much stronger foundation for decision-making.

Improve Financial Reporting

You may not need more financial reports—you may need more useful ones.

Consider whether your current reports give you the information you actually need to run the business. Depending on the company, this could include department or location profitability, cash flow reporting, budget-to-actual comparisons, or key performance indicators.

Establish a Regular Financial Review

A regular meeting with your CFO, controller, accountant, or outside financial professional can help ensure that financial issues don’t sit unnoticed.

The appropriate frequency will depend on the business, but the goal is to consistently review financial performance, cash flow, upcoming obligations, and important business decisions.

Consider Additional or Fractional Support

Sometimes the issue isn’t that your existing employees are doing a poor job. The business may simply have outgrown the level of financial support it currently has.

A growing company might need stronger accounting oversight, controller-level expertise, or strategic CFO guidance without being ready to hire another full-time executive.

In those situations, Fractional Accounting, Fractional Controller, or Fractional CFO services can provide additional expertise while allowing the business to scale its financial support as its needs change.

The Bottom Line

A good controller and a good CFO both contribute to a financially organized business, but they do so in different ways.

A controller should help ensure that the company’s accounting, financial reporting, processes, and internal controls are accurate, organized, and reliable.

A CFO should generally build on that foundation by helping management understand financial trends, forecast the future, evaluate risks and opportunities, manage cash flow, and make strategic financial decisions.

If you’re uncomfortable with the state of your company’s finances, start by identifying where the gaps are. You may need better accounting processes, stronger financial controls, more useful reporting, improved forecasting, or additional financial leadership.

The goal isn’t simply to have someone responsible for the numbers. It’s to have a financial function that gives you confidence in the numbers—and helps you use them to run the business.