Startup owners must always be on top of their venture’s finances and taxes to ensure efficiency, higher chances of obtaining financing, and, importantly, seamlessly identify risks and opportunities for the business. 

Although it might not be complex to keep track of your startup financial statements and maintain accurate financial records in the initial stages, it becomes increasingly difficult as your venture gains traction and starts bringing in substantial revenues. 

As such, it’s best to hire or outsource a financial controller to handle the ledgers and ensure full compliance. 

What does a financial controller do?

A financial controller is a senior-level manager who spearheads an organization’s financial operations, management, and regulatory compliance. For example, a controller might be a seasoned accounting professional who oversees accounting operations and is responsible for the company’s books and records. 

In sum, a financial controller will handle every aspect of your startup’s financial operations and ensure efficient accounting processes. Still, the role of a controller might vary depending on your venture’s size, the complexity of the business, and your startup’s industry. Here is a detailed overview of financial controller duties: 

• Create financial reports and analysis- A controller creates reports for executive teams detailing the company’s budget, financials, and forecasts. Also, they offer valuable insights into a firm’s financial position. In return, the executive can make strategic business decisions to help direct the business toward its goals. 
• They manage the financial teams. Financial controllers play a critical role in the hiring of accountants and bookkeepers. In addition, they supervise accounting and record-keeping operations such as tax preparations, income statements, invoicing, etc. 
• A financial operator handles insurance and risk management policies. 
• Financial management and regulatory compliance. 
• Monitoring and tracking inventory assets. Also, a controller is responsible for protecting a company’s assets. 
• Financial controllers might also be responsible for managing other business-wide initiatives such as IT, HR, sales tax and income tax reporting, and many more. 

As you can imagine, a financial controller must have a deep understanding of business finances and immense knowledge and experience in finance, accounting, or economics. But, most importantly, they must stay current with the prevailing finance technology to ensure proficiency.  

When the budget is somewhat tight, and the financial activities are not overwhelming at your startup’s initial stages, it would be best to manage the books by yourself and garner insights into how money flows in and out. However, and as already outlined, it’s paramount to bring on the support of a financial controller if you start experiencing growth transitions. 

Signs your startup needs a financial controller

Finding the right finance and accounting support level is somewhat intimidating to startup and SMEs owners. First and foremost, there are different types of finance professions. For example, bookkeepers might be an ideal fit for your startup, but they might not be suitable for carrying out complex accounting policies and creating forecasting models. 

On the other hand, hiring someone overqualified, such as a Chief Financial Controller (CFO), isn’t an ideal strategy for your startup. CFOs tend to be more risk-averse and conservatives in their opinions, which might be detrimental to your startup in the long haul. Not to mention CFOs are expensive, and roles such as compliance responsibilities, managing historical transactions, payroll, accounts receivables, and payable are way below their pay grade. 

Therefore, how can you consider when your startup is ready to hire a competent financial controller? 

Your business is growing

The most obvious sign that your startup needs a controller is once it starts experiencing tremendous growth. Accounting 101 practices won’t cut it anymore if your startups grow exponentially. 

If you start dealing with a high number of transactions more complex accounting needs, hiring a controller will go a long way in providing a steady hand to organize the growth. Even better, they relieve the burden of handling all management issues on your own, and in turn, you can focus on the bigger picture. 

A controller ensures the ideal financial practices during an expansion, helps keep up with the growth pace and offers access to the proper tools and software. 

You Are Lacking Clear Accounting Policies

If your startup is missing accurate and timely financial insights and finds it hard to meet essential financial deadlines, hiring a financial controller is vital. In addition, if your current economic team finds it challenging to pinpoint errors in financial reports and correctly categorize transactions, a controller will help set the policies. 

Insurance and risk protection

A controller’s insights and guidance can be very substantial if you consider insurance protection for your growing venture. It’s the core duty of controllers to protect a firm’s assets, making them appropriate for risk protection.

You intend to seek investors

A financial controller can provide more accurate and thorough financial processes and reporting that will get you on a good side with investors, bolstering your chances of acquiring funds.

Tax obligations

Non-compliance is a significant impediment for startups and SMEs. Failing to understand your startup’s tax obligations can get you on the wrong side with the taxman. As a result, you might have to pay hefty penalties and interests and, worse, end up losing the relevant licenses. Not to mention ruining your startup’s reputation. A controller can help develop strategies that keep you ahead with tax obligations. They help ensure you meet deadlines and plan for payments in a proactive manner. Most notably, you can enjoy tax benefits applicable to your business. 

Final thought

Ultimately, the decision of whether your startup needs a financial controller depends on how overwhelming the accounting duties are and the essence of keeping your startup sustainable. Proper accounting and being on top of your startup finances are a healthy organization’s cornerstone. 

There is no doubt a qualified financial controller will ensure accurate financial statements, efficient accounting processes, and several other benefits. Although it might be expensive for in-house hiring of a financial controller, an apt controller can pay themselves through substantial cost and time savings. Alternatively, you can outsource controller services. All in all, a financial controller will set your startup on a path to optimal success.