15 Ways Making The Leap To Hiring A Controller Will Help Your Company Grow
When should you hire a controller for your company?
Many small firms question when they need to hire a full time bookkeeper; the next step is a controller; and then a chief financial officer.
The Transition From Bookkeeper To Controller
Once a bookkeeper (either part or full time) is hired, the business is on its way to growing. Many of the higher level financial functions are “outsourced” to the Company’s independent accountants.
As businesses develop it becomes necessary to consider bringing in a controller to oversee the bookkeeping and the next step up.
Bookkeepers have a great responsibility to:
- maintain current billing and overseeing collections,
- making sure merchandise that was ordered,
- properly received and paid for,
- managing payroll,
- keeping the accounting and related records up to date,
- preparing workers’ compensation reports,
- handling unemployment insurance claims,
- union filings,
- health insurance plan maintenance,
- sales tax returns,
- balancing and reconciling schedules,
- preparing daily or weekly flash numbers and monthly system generated financial statements.
Bookkeepers maintain insurance schedules, recurring payment calendars and in many cases serve as administrative assistants to the owners and are an important and valuable team member. But there comes a time when more is needed, therefore a controller is considered.
The Controller’s Responsibilities
A controller does not replace the bookkeeper, but does replace some of what the owner and independent accountant do; but that is not the justification for bringing in the controller. Here are some of the services the controller will perform.
- The controller becomes responsible for the proper functioning of the financial reporting and accounting and bookkeeping departments.
- Training, overseeing and supervising the people in those departments.
- Regular evaluation of the accounting systems and software and equipment.
- Development and presentation to management of the reports needed by them to make decisions.
- Set up or revise, review and monitor the business’s internal controls.
- Profit planning, budgeting, sales forecasting, projecting capital investing, cash flow planning including banking needs, credit allocations, cost accounting, price testing and the establishment and administering of procedures to accomplish these functions.
- Projecting the cash needs includes identifying funding sources, profit and loss and cash flow from contemplated activities. This would also include pricing decisions and capacity utilization.
- Where applicable there will be oversight of loan agreements and covenants and interaction with the lenders to maintain a regular and consistent relationship with them.
- Where necessary, financial and accounting policies will be formulated and coordinated with the independent accountants including accounting methods used by the Company. The controller will also adjust the financial statements and write the notes to financial statements.
- Tax administration and government reporting will be controlled and overseen.
- Methods to control fixed assets would be instituted and managed including auditing and evaluations of insurance coverage and needs.
- Overall company risk exposure would be considered.
- Becomes familiar with special accounting requirements when company is in a specialized industry such as construction contracting, insurance agencies, real estate brokerages, law firms and manufacturers
- The controller should also be aware of economic conditions that might affect the operations of the business or its assets and bring assessments to management’s attention.
- The controller should be a member of a professional organization where they will interact with other controllers and attend courses covering the newest techniques and methods.
When the business is ready for someone to perform the above services, it needs to make the leap to hiring a controller.
This is a guest post from Edward Mendlowitz, CPA, Partner Emeritus WithumSmith+Brown, PC, and author of blog at www.partners-network.com
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