The CFO is Not Your Most Critical Finance Hire

I build finance departments for a living.

When it comes down to it, that really is the job of a CFO.

Just like a CEO’s job is to build a company – not be the company – and a VP of Sales’ job is to build a sales team – not be the sales team – the same is true for Chief Financial Officers.

CFOs build teams to carry out the business of the finance department.

More than a few times in my tenure as an on-demand corporate finance consultant, I have been brought in by a founder needing help to sort out the Finance department. Sometimes I replace an already-departing CFO, other times I work with an incumbent CFO. In some organizations, I am an interim CFO, and often I am just the plain-old CFO.

Regardless of the circumstances, I find that these companies all have one thing in common: no controller.

What does a controller do?

A controller is generally in charge of preparing accurate and timely financial statements.

They are typically a highly skilled accountant, and the best ones are smart, likeable, business-minded problem solvers, with a core competency in accounting.

Accountants memorize rules, apply them to business activities, and defend their decisions once a year during an audit. As a controller, days and hours matter. The end of the month is the end of the month, even if that day is New Year’s Eve or your mom’s birthday.

It’s not a super sexy job, but it’s totally priceless.

This is the most difficult position to fill when building finance department. It takes time and diligence to find a controller with the skill set and cultural fit needed to make this position successful. The worst controller hires I made, I made from a stack of resumes. The best, I found through my network.

As a CFO, a competent and reliable controller is priceless.

Why are controllers so valuable to a CFO? Because without a super solid controller, the CFO becomes the controller. In essence, the CFO becomes the finance department.

Depending on the preferences, and skill set, of the CFO, this may work out ok. In the end, however, a CFO must be expected to be a CFO.

Think of it this way – your VP of Engineering might code the back end of the entire product for a period of time, but once you are big enough as an organization, he won’t, because a back end developer is a different job than a VP of Engineering.

Why is this position so tough to get right?

There are a ton of accountants available in the world. But the risk to the CFO is enormous if this hire is not done right.

Financial accounting is the common language of financial markets, banks and investors. The greater the revenue, the higher the expectation for accurate financial reporting.

If the controller is not cranking out timely and accurate financial statements, as a CFO, I can’t just tell the bank investors they have to wait. Your VC firm doesn’t care that your Controller sucks, and your mother’s birthday is January 2nd – they’re not going to wait for preliminary results for the last fiscal year.

As a CFO, I am the one throat to choke for the entire finance department.

If I make a bad hire, I have to eat my own dog food. Fiscal year end waits for no one. If I screw up the controller hire, I can’t just pick up the bat phone and call another one (well, I could and I have, but for most privately held startup companies, these kickass Batmen of US GAAP are prohibitively expensive.)

In these situations, like a woman on a mission, I cobble together the accounting function from the skills I have on staff. I transform into the highly skilled accountant I went to graduate school to be – but not the CFO I was hired to be.

I’ve written before on when to hire and not to hire a CFO.

Founders, you can live without a CFO. Really, you can. Maybe even a long time.

But you cannot live a long time without a controller. If you want to understand your numbers and have confidence in your reporting, don’t hire a CFO, hire a controller. And not the first one, or the cheapest one – the best one.