What makes a good Financial Controller?

First things first: what is a Financial Controller? 

Of course, job titles can mean different things depending on the context. But I must say, the term ‘Financial Controller’ seems to be getting broader by the day. And, in turn, I think we’ve all got a bit confused. Case in point, have you seen job advertisements recently for £30k FCs and thought to yourself ‘is that really an FC job?’. 

Well, it is most probably NOT an FC job. Or if it is, then they need to double their budget! 

So, I’d like to set the record straight and explore what it really means to be a Financial Controller. 

In a nutshell, a Financial Controller is a middle management level role, responsible for all aspects of ‘team-leading’ and ensuring the correct processes are in place to report information to the exec team. The accurate and robust reporting from the FC is critical for the senior leadership team to effectively run the business. However, in its purest sense, an FC does not sit on the board officially. 

Equally, an FC shouldn’t be the person doing all the doing either. For a Financial Controller, timely and accurate reporting from the team beneath them is essential. So, a good FC will look to make improvements to processes and systems and get things running like clockwork. The speed in which reports can be delivered, without compromising accuracy, is often a reflection of a good FC. On the flip side, if the numbers are late or god-forbid wrong, it’s the FC who’s going to cop for it! 

What’s the difference between a Financial Controller and a Finance Director?

I get asked this a lot. Mostly by business owners of SMEs who probably want one person to do both jobs. And look, that’s not impossible per se. However, I always encourage my clients to recognise that the responsibilities between an FC and a FD are fundamentally different. And, consequently, the attributes and experience you are looking for will differ. So, one person trying to cover both roles is likely to be better at one versus the other. Or, most commonly, only has time to complete the FC duties, whilst neglecting the strategic FD responsibilities. 

Typically, most effective finance departments would have both an FC and an FD. However, your FD doesn’t necessarily need to be full-time, read James’ article on portfolio FDs.

So, let’s draw some distinctions between Financial Controllers & Finance Directors: 

1. Financial Control – It’s the Financial Controller’s responsibility to ensure financial transactions are recorded accurately and on time, by embedding thorough processes. The Finance Director shouldn’t have to worry about this, it’s done for him/her. However, they are accountable for the end result.
2. Management forecasting and reporting – A Financial Controller will oversee / prepare management information and provide commentary and analysis on performance against budget/ target. However, it’s the FD who would set such financial targets in the first place. If the financial performance is not in line with the overall business strategy, then the FD will be able to provide the board with an alternative course of action. 

3 things a Financial Controller does not do

1 – Post invoices

In the same way as an FD is a little removed from the day-to-day transactions, so is the FC. They help the transactional team to build processes and controls but they don’t execute them on a daily basis. 

2 – Manage operations

Clients have often made the mistake of looking for an FC that will get really involved in the business operation. Yes, they will be out there, discussing the operation at various stages to understand how things work and how they can improve. But an FC is an accountant first and foremost, not an operations manager. 

3 – Set strategy

Expecting your FC to come up with a strategy for the business’ growth is like asking your auditor to outline your legal framework. They’re bright people, could make a decent fist of it, but the obligation lies with someone else ultimately.

What does a Financial Controller do? 

They control the finances. There you go, job done.

But seriously, there’s a really broad answer to this question so I’ll try to break it down into sections, with obviously the first being financial control, meaning:

• Ensuring tight processes to record all financial transactions, completely, accurately and on time;
• Managing monthly and annual cut offs and accounts closures;
• Reviewing and preparing journals where needed;
• Reviewing control accounts and general ledger reconciliations.

There’s then the compliance section:

VAT, PAYE etc submissions & returns. Co-ordinating audits.

Working capital management:

• Building and reviewing cash flow forecasts and alerting the FD to any potential shortfalls;
• Reviewing the debtor balances with managers and credit controllers;
• Liaising with managers and payables to recommend priority payments out;
• Ensuring correct payment approvals.

They manage relationships, particularly the finance team and getting the best out of people. They support the FD and other directors. They help manage the expectations of managers across the business.

The best FCs also focus on improvement measures. They develop a culture of empowerment and innovation within the finance team (that’s right, a creative finance team!). They identify training needs across the team as well as systems improvements measures. They look for profit improvements across the business and set about executing them.

What’s the difference between a Financial Controller and an Accountant?

An accountant keeps the score and reports this. They’re predominantly backward-looking, ensuring that transactions have been accounted correctly and adhering to financial reporting standards. Any accountant will tell me there’s so much more to it than that but in a nutshell that’s it.

A financial controller will do a lot of this, but they’re also looking forward a lot. They’re looking across the business, identifying areas for improvement and how to build a better-functioning, more profitable business. 

In simple terms, an accountant looks back while a financial controller looks backwards and forwards (cue imagery of wobbling heads!).

As a business owner, what options are there for me? 

Firstly, it’s time to get really clear on what you’ve got. If there’s only 1 person in your finance team then you immediately have a problem. You may trust that person implicitly, you may have some financial training yourself, but are you 100% happy that every single financial posting is completely accurate? Without what we call the “4-eyes principle”, how can you really be sure?

We often speak to owners of rapidly-growing businesses who have simply ignored the development of a finance team because they’ve been so busy selling, or developing a better product or service. Ignore building a proper finance team at your peril! We’ve seen too many businesses leave it too late. Get in touch too early rather than too late. Even having a part-time FD look under the hood of your finances will invariably unearth some issues, which if left for too long can be terminal. In fact, hire a part-time FD! Whether you think you’re in good shape or not, they will tell you what’s really going on. They can then tell you what the best solution is going forward. For businesses in the sub-£20m world, it is often a part-time FD alongside a Financial Controller. We’ve seen this combination work brilliantly well time and time again. And it needn’t cost as much as you may think.

What does an FD look for in a Financial Controller? 

Having recruited for FDs up and down the country, I can tell you categorically that FDs want an FC they can rely on. Someone who doesn’t mind “doing the do”, allowing the FD to get stuck into the challenging issues at board level. They don’t mind someone a bit raw, with room to grow and a bit of mentoring, but they don’t want to hold someone’s hand every day. They want comfort that the finance team is being managed effectively, that the auditors are being controlled, that cash is being looked after.

Do you want to be an FD? Great, no problem, but recognise that you’re employed as a Financial Controller right now and that those opportunities will come in the future. Do a really good job as an FC and a decent FD will look after you, whether it’s within your current organisation or whether your best move is go somewhere else. 

What does it take to become a Financial Controller? 

You’ve hopefully picked up on the point that first and foremost, you need to be a safe pair of hands. You might have big ambitions, and that’s fine, but recognise that the role of an FC is varied and multi-faceted. There will be things you’ve never come across before, there will be issues and challenges galore. If you’ve learned the building blocks of a finance function and a business, then you’ll be better placed to make the most of your team and be able to tackle the issues properly. 

Take your time. If you’ve got the right attitude and ability, then the opportunities will come. Maybe not today or tomorrow, but soon. Hopping jobs every 6 months does little to inspire the confidence of an FD that you will stick things out when the going gets tough. 

Work on your people skills. You may not be managing right now but that doesn’t mean you can’t learn & develop yourself to be a great leader. Mentoring opportunities these days abound – sign up to one either within or outside your organisation. CIMA, ACCA and ICAEW help build great accountants but lousy managers. The best FCs and FDs buck this trend and recognise the need to lead, and lead well.

Get a mentor. Who do you know that can help you grow? Who is in the position you want to be? Maybe not in the distant future, but at some point in the future maybe. If you can’t think of anyone, ask around. What I’ve noticed in the world of finance is that there are loads of really capable people that are really generous with their time and want to help people progress.