What is a Financial Controller and What Role Do They Play?

If you run a small-to-medium-sized (SME) business, there's a valuable ally you might want to consider bringing aboard–a financial controller. Given the often constrained resources that SMEs navigate, the presence of a financial controller takes on an even greater significance.

So, if you’re curious about the role and benefits of a financial controller for your company, this article is for you. In the following extensive blog post, we're embarking on a thorough exploration of financial controllers–their vital responsibilities, their profound importance, and the tangible impact they wield within the realm of SMEs.

Defining the Financial Controller

A financial controller is a key executive responsible for overseeing an SME's financial operations, strategies, and reporting. They play a pivotal role in ensuring financial health, compliance, and growth. Unlike a bookkeeper or accountant who focuses on transactional tasks, a financial controller is a strategic leader who provides valuable insights to drive informed decision-making.

Roles and Responsibilities

The financial controller is a multifaceted role. Here are some of the functions that financial controllers perform:

Financial Reporting and Analysis: A financial controller crafts comprehensive financial reports, analysing key metrics and trends to provide a clear snapshot of the company's fiscal health. Effective financial reporting is key to SME growth.

Budgeting and Forecasting: Developing accurate budgets and forecasts is imperative for SMEs. Over 50% of businesses fail to create budgets which can lead to overspending.A financial controller leverages historical data and market insights to create realistic projections, aiding in resource allocation.

Risk Management: Financial controllers also act as the custodians of risk assessment and mitigation. Their expertise helps SMEs identify potential financial pitfalls and devise strategies to navigate them.

Cash Flow Management: Maintaining optimal cash flow is a lifeline for SMEs. Financial controllers monitor cash inflows and outflows, ensuring liquidity for day-to-day operations and growth initiatives. Studies reveal that 37% of the UK’s SMEs have cited cash flow as a major concern, with 13% worried specifically about non-payment of invoices.

Compliance and Regulatory Adherence: SMEs often grapple with complex regulatory environments. A financial controller ensures compliance with tax codes, financial standards, and reporting obligations. Non-compliance can lead to substantial penalties, underscoring the critical role played by financial controllers.

Strategic Direction: Financial controllers go beyond accounting. They can aid strategic direction by providing data-driven insights, conducting financial analysis, and guiding resource allocation. Their expertise ensures informed decisions, optimising growth, cost management, and overall business success

When Does an SME Need a Financial Controller?

An SME should consider hiring a financial controller when it experiences rapid growth, complex financial operations, or struggles with financial management. For instance, if a retail startup expands its operations to multiple locations, a financial controller can oversee budgeting, inventory management, and financial reporting.

Related Read: Getting Your Books Right: 5 Retail Accounting Challenges

Similarly, if a tech company secures substantial funding, a financial controller can ensure efficient cash flow management and compliance with investor requirements. Moreover, if a service-based SME faces intricate invoicing and expense tracking, a financial controller can streamline processes, enhancing profitability.

Related Read: Accounting for Technology Companies: Challenges and Solutions

In essence, a financial controller becomes vital when an SME's financial tasks become intricate and time-consuming, hindering strategic decision-making. They bring expertise to manage financial complexities, interpret data, and provide insights that empower SMEs to navigate growth challenges successfully.

What to Look for in a Financial Controller

Now that you’ve decided that your business needs a financial controller, here’s what to pay attention to so you don’t end up with a wrong match.

1. Expertise: Look for a professional with a strong background in finance, accounting, and relevant certifications.
2. Experience with similar businesses: It’s always a bonus if your chosen financial controller has got experience working with similar businesses to yours.
3. Adaptability: Look for individuals who can handle diverse responsibilities, from day-to-day financial operations to strategic planning. An example might be a candidate who implemented cost-saving measures during economic downturns.
4. Analytical Skills: Seek candidates capable of interpreting financial data to inform strategic decisions.
5. Strategic Vision: Choose individuals who can contribute to the company's growth by providing forward-looking financial insights.
6. Tech Proficiency: Ensure proficiency in accounting software (e.g., Xero) and Excel for efficient financial analysis and reporting. A Risk Management: A controller who can identify and mitigate financial risks can safeguard the SME's assets. An example might be a candidate who implemented internal controls to prevent fraud.
7. Cultural Fit: Consider alignment with your company's values and culture. A candidate who resonates with your SME's entrepreneurial spirit and collaborative environment will likely integrate well.
8. Communication Skills: Prioritize those who can effectively communicate complex financial information to non-finance stakeholders. For example, a controller who presented financial insights to the leadership team, facilitating strategic discussions.
9. Continuous Learning: Finance is an evolving field. A candidate who actively seeks professional development opportunities demonstrates a commitment to staying updated and improving their skills.

Remember, a well-rounded financial controller will blend technical skills, adaptability, communication, and strategic thinking to drive your SME's financial success.

The Bottom Line

Employing the expertise of a financial controller to oversee your accounting functions can bring significant advantages to both you and your small enterprise. However, this is a choice that should not be made without careful consideration.

Considering the pivotal role your finances play in propelling your business forward, it becomes imperative to secure a proficient financial controller who embodies traits of meticulous organisation, precision, and a results-driven mindset.

Sanay provides comprehensive outsourced finance department services that encompass financial control, strategic management plans, and more. Distinct from traditional accountants, we assume the role of your partner in driving the growth of your SME.

Our expertise spans a spectrum of vital functions, ranging from meticulous bookkeeping and accounting to adept financial management and innovative accounting technology solutions.

Don’t delay and get in touch with our team today.