Finance Basics

What CFOs Expect from their Controllers

Controllers are drivers in business today. Financial data is richer than ever, and financial professionals across the board are expected to be more than data-driven. Business acumen, narrative analysis of data, and high-level leadership are now essential for today’s controllers.

These trends have been coming to a head for at least a decade. An oft-cited Ernst and Young report from 2008 showed wide agreement that the role of controllers was poised for a broadening that would turn it into a driver of business. The fact that the financial community still refers to that report is an indication of how spot on its predictions were.

Today, controllers and CFOs drive business forward together. Controllers are gaining more independence from their CFOs and doing more to support their goals and the goals of the company.

Building a team that preempts problems

The controller is in charge of building and developing a top-notch finance team, and this is hands-down one of the most important parts of the job and one of the most important ways a controller supports a CFO.

But building a team is more than just filling empty seats. Today’s controllers need to understand how to build their team for the future of business financials, which means understanding better than anyone else where the industry is headed. From automation to security for the mobile workforce, a controller must have a keen understanding of how to start filling needs before they fully appear.

A great example of this is building out the knowledge on your team of ASC 606. Experts on an unknown framework aren’t easy to find, but finding a person to become that expert could be vital for future success. As Tien Tzuo, founder and CEO of Zuora, says:

“Given three years to do something about it, most finance departments promptly forgot about the new regulations. . . Today they’re either panicking to very little effect, or being willfully ignorant. Make no mistake — some corporate valuations are going to tank as a result…”

The controllers who decided three years ago to expand their teams to make bandwidth for their department to conceptualize and implement the necessary process changes are the ones who can meet ASC 606 with confidence. That leadership is what CFOs need from their controllers.

Thinking about business beyond the numbers

A typical way to split some controller and CFO duties is to think of controllers as looking backward — trend reports, monthly budgets, analysis of spend that has already happened — and to think of CFOs as looking forward to finances and profit, and in business.

Controllers need to be highly attuned to what the larger goals of the business are and how controllers can shape their work to support them. It could be as simple as adding new KPIs to reports to correspond to changing business goals, or it could be as complex as overhauling analytics for greater visibility into key areas.

In a Forbes Insights report, Arlen Shenkman, CFO of SAP North America, says, “I think business itself is transforming, and finance is part of that collaborative approach. . . Controlling is helping to drive the numbers and helping to make business decisions, and it is a very valuable resource for any business unit or business leader.

[Controllers are now] helping the business decide what they’re going to drive, where they’re going to make investments, and helping them understand how economics play into that.”

That same report showed that a cornerstone of transformative controllers’ work was the ability and freedom to leverage their department to support progressive business goals:

Controller characteristics[Source]

Adding value to the organization as a whole, for example, means a controller provides more than just great reporting. It means great financial analysis and lightning-fast insights — visibility that allows exact figures to be pulled within minutes. It also means exploring avenues for technological upgrade, such as finance automation for increased accuracy.

This underscores the symbiotic relationship between the CFOs and the controllers of today. Controllers take a more holistic view of their role, more directly supporting larger business goals, and CFOs are happy to empower the controllers to make it happen.

Since controllers are in charge of financial statements, reconciliations, and reporting, accuracy is critical to their job performance.

But accuracy isn’t quite as transparent as it could be. Financial rules and regulations are constantly changing, and technology has only made keeping up with compliance more of a minefield. What constitutes accurate, and whether following compliance procedures will give you an accurate picture of your business are up for debate.

Take Twitter’s 2015 reports: They reported a GAAP net loss of $521 million but an adjusted EBITDA of $557 million and a non-GAAP net income of $276 million. It’s up to controllers to determine how and why these numbers look different and what the reality of a company’s situation is beyond the standard measures.

Inconsistencies in reporting and the lack of more stringent regulations for companies prior to their IPO showcase how much control over a company’s image financial reporting can have. In a report from the Harvard Business Review on the failings of financial reporting, H. David Sherman and S. David Young point out that no matter how a business chooses to evaluate themselves, there are always other sides of the story. And technology has only complicated the matter.

A controller who understands all angles of revenue, projections, and reporting regulations will be a driver for company success well beyond simply being an information supplier. Controllers must look beyond easy notions of accuracy and compliance to fully support their C-suite counterparts.


The Finance Stack of Top Performing Startups

    Business partners leveraging technology

    A Journal of Accounting & Organizational Change study reported that controllers could significantly add to the competitiveness of an organization by becoming business partners. (Business partners create solutions that provide value to internal teams.)

    To fulfill this new strategic role, controllers are adopting finance automation strategies. Finance automation harnesses new technologies while simultaneously improving culture to:

    • Empower all employees
    • Reduce manual tasks for the finance team
    • Eliminate financial reporting lag
    • Speed up end of month close
    • Mitigate risk (by reducing human error)
    • Ensure regulatory compliance
    • Increase efficiency

    Automation processes will be a crucial tool as the role of the controller moves beyond tactician to key strategic player.