A key player in any business is the Controller. The Controller skill set is likely not one of the typical entrepreneurs. We provide outsourced / part-time Controller services when needed to companies.
Controller's functions in a typical finance department and why each is important:
· Accurate and timely transaction processing – Transactions need to be properly recorded. This means that contracts, leases, invoices and other source documents should be interpreted, for them to be properly characterized consistent with generally accepted accounting principles. This is the foundation on which a financial reporting system is based on and the Controller can ensure this happens.
· Efficient accounting department operations – The various processes within an accounting function - accounts payable, billing, accounts receivable, fixed assets and payroll, among others – need to be managed and controlled. A Controller can bring discipline, coordination and oversight to accounting operations.
· Effective internal controls – The flow of financial information within your company should be evaluated and systematized for maximum efficiency, taking into consideration the proper segregation of duties, authorization, work process review and other controls necessary to deter fraud and mitigate weaknesses. A Controller is trained to evaluate information flow and establish proper systems of internal control.
· Meaningful financial statements – You always need to know how your company is performing. A full set of financial statements including: a balance sheet, income statement, statement of changes in equity and cash flow (and required explanatory notes), is the starting point. A Controller can develop a set of appropriate financial statements for your business.
· Effective cash management – The cash flow forecast is an educated projection of the sources and uses of cash in a meaningful near-term horizon, typically four to six weeks. Longer projections may be modeled but are subject to greater error. The cash flow forecast is an essential tool for every company and the Controller is skilled in developing such a model and increasing its accuracy over time.
· Effective budgets – The budget process is one of those customary and sometimes difficult annual exercises, which require a substantial amount of discipline. In effect, a budget is the result of a complex negotiation between competing priorities. Every company struggles with the process, but every responsible company meets the challenge; a company without a budget is a company without a metric to mark progress or show the need to make corrections. A Controller has the equitable skills to develop a relevant budget model and drive the process through to completion.
· Useful forecasts – A business rarely unfolds as planned and forecasts are used to update expectations, based on new information. While common in large public enterprises, forecasts may or may not be appropriate for a small business. An experienced Controller can help determine whether this exercise is of value and if it is, make sure it happens.
· Meaningful management reports – While financial statements are intended primarily for external parties, management reports are designed to present information that management considers most important to run the business. This is an area of great potential creativity and the skilled Controller will design reports of specific relevance, to the company that draw on both financial and non-financial information. Properly designed management reports provide insight into the key drivers of the business (usually known as key performance indicators or KPI’s) and provide the basis for actionable recommendations. Identifying, reporting and managing KPI’s is one of the most important functions of the Controller. Knowing which products or services generate most profits is a necessity to managing any business.
· Strategic banking relations – Most companies need to develop a relationship with one or more banks, for cash management and liquidity purposes and for longer term financing when required. Controllers are experienced in developing such relationships and know how to maximize the value and minimize the cost of a bank’s services.
· Tax Management - Paying taxes is an unavoidable cost of doing business; structuring transactions and business operations, in such a way, that an organization pays the least amount of tax while complying with the law. A Controller typically works with the third-party tax firm to focus of effective tax management.
Your Controller is a key member of top management. He or she is responsible for developing and managing the infrastructure necessary, to objectively evaluate company financial performance and provide insight into maximizing growth and profitability.