The finances of a company are complex elements that play a major role in the organisation. They depict the purchasing power of the organisation, portray its revenue and income, and help make forecasts about the future.

There are many officials and industry experts who deal with the process of controlling and managing the finances of an organisation. One of them is a financial controller. Today, we will explore the roles and responsibilities of a financial controller, and why having one is vital for your organisation.

What Is A Financial Controller?

A financial controller is a person in an organisation that’s assigned the task of managing the finances, accounting and all other strategies related to the finances of the organisation.

They should have the skill to be able to forecast long-term goals and make strategies based on these goals. Their work should be highly efficient and should have little scope for errors as lack of accuracy can cause big troubles for the organisation.

A financial controller can also do the task of the accountants, but they do not specifically do accounting. Accounting is the process of recording the financial data of the company, while the job of a financial controller is to oversee the processes involved in accounting.

They have to adhere to the company rules and regulations and ensure that there is no discrepancy. If any discrepancy is found, it is the duty of the financial controller to identify and resolve the problems caused by that discrepancy, along with making the parties involved accountable for the same.

What Function Does The Financial Controller Perform?

A financial controller performs an array of tasks for the organisations in which they are employed. We will now study the multiple types of roles performed by the financial controllers.

1. Traditional role

Financial controllers were also recognised as the head accountant of the finance department of the organisation. They play the leadership role by ensuring compliance with government rules and the industry standards of the various financial processes.

They also overlook the creation and maintenance of financial statements and general ledgers to ensure that the actual cash flow of the organisation is correctly incorporated in the books. Financial controllers act as a link between the finance department and the management. Some other traditional roles of financial controllers include-

● Ensuring that payments that are due by the debtors and the customers are received

● Managing general accounting operations

● Handling bank accounts and corporate credit cards

● Working with third-party certified public accountants

● Creating and managing financial policies

● Filling tax forms at the federal and state levels

● Reviewing accuracy in payrolls.

Financial controller functions include coordinating with the IT departments to improve the technologies involved in the financial department.

They also work closely with the HR department to hire officials in the finance field. Often, they play the role of the chief financial officer, in which they have to work with multiple projects doing tasks such as reporting, planning, budgeting etc.

2. In-Depth Tasks

The financial controller needs to promote accuracy. They use some tools to streamline things and ensure that what is produced is flawless.

Financial controllers play a significant role in building workflows and processes, which can help the organisation eliminate errors so that they can be free of risks. They even monitor the internal controls created by the CFO, which include accounting standards and determining the roles to be played by the financial employees.

3. Strategy Creation

While accounting is done based on the data incurred in the past, a financial controller works in the present and forecasts for the future. They get real-time views of expenditure and income with the help of intuitive tools.

This information helps the financial controllers to work on a strategy that is meant to facilitate the growth and sustainability of the organisation. They create strategies which are wholly driven by data. Finally, they present the strategy to the management team and ensure they provide the best results.

4. Risk Management

Risk management is another task taken up by a financial controller. With the help of the formulated strategies, they try to expose the organisation to as little risk as possible. They understand the current financial picture and consider the situations asked to assess the risks.

They keep an eye on the company's assets to ensure they are present and evaluate their current situation and depreciation. They also analyse the transaction records to ensure that no fraudulent activity occurs from internal or external factors.

They do this with the help of proper record keeping and reducing the negative impact of risks on the organisation and its employees.

5. Expenditure Management

It is the function of a financial controller to manage an organisation's expenditures. They often use the help of efficient software to do this. They can ask for and access any information they need to manage and assess spending.

They can also create budgets and add limits on spending for each department. They can roll out savings strategies for the revenue cycles when the income is not consistent. Their overall goal is to meet the annual or other long-term financial goals.

The financial controller plays a significant role in informing the management about the company's purchasing power. This helps the board of directors in making better decisions pertaining to the budget and expenditure of the organisation. They find ways to spend less while keeping the quality of the product and the services intact.

Why Are Financial Controllers Important?

Financial controls play a major role in handling the expenses of an organisation. They have a highly technical role and our exports in the financial matters. They ensure compliance with the rules and regulations for the organisations. They are highly corporate, with soft skills as well as hard skills, making them an evitable part of businesses. They enhance the level of accuracy in the financial statements of an organisation.

When Do Businesses Need A Controller?

When any company or firm has just started up, the level of complexity in the finances is relatively low. In such circumstances, they can manage their finances with the help of a few employees, which might include accountants, bookkeepers, etc.

However, as, and when the company starts growing, the complexity of its finances also grows. When a business expands geographically and starts producing more revenue, the accountants do not have the skills or the resources required to manage the income and expenditure of the organisation.

At such times, businesses need the help of a financial controller. Financial controllers help them navigate taxes, financial planning, compliance with the laws, predictions etc. The global rule says that every business that generates revenue in the range of $ 5 to $10 million should have a financial controller or a team of financial controllers to manage the expenditures and spending of the organisation.

CFO vs Financial Controller

The primary difference between a chief financial officer and a financial controller is the vastness of the organisation in which they work. The employment of a CFO and FC depends wholly on the organisation's size. An organisation which is small in size can work well with a CEO and a financial controller.

On the other hand, if the organisation is quite large, it requires a CFO to handle the comprehensive finances of the organisation. For example, when a company starts dealing with complex financial transactions, the role of the finance department expands automatically.

This occurs when the organisation starts working with huge financial markets or performance mergers and acquisitions. Thus, with an organisation's growing role, the requirement of a CFO is faced by it.

Another significant difference between a CFO and a Financial Controller is that a CFO's responsibilities have all kinds of financial activity, including budget forecasting, working with the investors, managing the treasury et cetera. On the other hand, a financial controller merely focuses on internal controls and systems, ledgers and balance sheets and expense management.

Roles And Responsibilities Of The Financial Controller And Their Changing Nature

The roles and responsibilities that financial controllers have taken upon themselves since the creation of this job role are shown below:

● Supervising accounting processes

● Regulating club cash flow and profitability

● Managing financial risk

● Overseeing transactions including payroll, receivables, balance sheets etc.

● Ensuring accuracy in financial reporting

● Managing external audits with the help of CPS

● Handling the book closing and financial statements

● Adhering to the tax liabilities and compliances

● Creating and managing budgets

● Monitoring internal as well as external controls and policies.

These have always been the typical tasks of the financial controller, however over the last decade, the role of financial controllers has witnessed a paradigm shift. They have understood that a controller's job is vital and more strategic, and therefore goes beyond performing the day-to-day tasks.

Financial controllers need to find new error-free and more efficient ways to perform their daily tasks. They have to be more involved in creating strategies and overseeing that the employees of the organisation in our working comply with those strategies.

The fast changes in technology have also helped them eliminate the day-to-day recurring work, which is now being handled by the technology tools and software.

In addition, financial controllers must update themselves with the changing tax laws and altering global issues. The stance of the global economy has also been evolving over the past decade, bringing about a lot of change in the role of financial controllers.

Essential Practices For Modern Financial Controllers

To be successful at their job, financial controllers today need to follow some of the practices mentioned below.

1. Automate

As discussed above, financial controllers need to automate everyday monotonous tasks. Their regular functions are now being handled by the tools and software, while the financial controllers can focus on more constructive and productive jobs.

They can spend their time on more strategic initiatives while the tools and software seamlessly carry on the entire process. With the help of automation, the financial controllers do not have to spend much time and effort devising financial information and analysing the data.

They get the reports automatically and can find strategic patterns and impactful insights into them. Consequently, they can shift their role from tactical to strategical and develop and formulate more efficient and beneficial strategies for the organisations.

2.Communicate

Today, a financial controller needs to have excellent interpersonal communication skills. This can help them be effective inside or outside the organisation and with the key stakeholders and the employees.

This can help them drive and forecast decisions that are data backed and communicate these to their senior management and the employees that drive business changes to achieve better efficiency.

With the help of this data and enhanced communication, they can experiment with forecasting, pricing models, financial analysis etc., which can be done only if all the departments work together.

3. Establish agile methodology

It is the role today of a financial controller to understand the existing gaps in the tech stack. While there are so many systems that an organisation deals with, they do not talk to each other, and a financial controller needs to keep them in synchronisation. This can facilitate growth for the organisation by providing data management, automation, and regulatory and highly efficient reporting frameworks.

Final word

Getting an ethical and dedicated financial controller for your organisation can do wonders you cannot imagine! While managing your expenditure and formulating a budget is essential for any organisation’s smooth workflow, it is now mandatory to have a financial controller employed in the organisation.

Alongside a dedicated financial controller, it’s important to have the tools necessary to automate your daily financial tasks so the controller can focus on the current data and forecasting for the future. Billsby is a great tool to add to your stack! With Billsby, you can fully automate all of your recurring billing tasks, and even share this data with your chosen accounting system. So, why not try Billsby today and sign up for a free trial!