A client recently shared with me the story of his business, before and after hiring a controller. Like many small to medium-size businesses, he was relying on an existing staff member – his office manager – to handle bookkeeping, invoicing, and other financial responsibilities. But when she suddenly resigned, the company was in turmoil and struggling to hold the pieces together. It was an alarming revelation that the business had not had nearly the financial oversight needed for its size and complexity, nor did it have appropriate policies and procedures in place.

Business owners often attempt to manage their own finances and bookkeeping for a variety of reasons – to keep sensitive financial information safe, to personally maintain control of finances, or to minimize staffing and associated costs. This practice may be valid for startups and may work for new and small operations, but as businesses grow it becomes increasingly impractical – and costly. Money is the lifeblood of business and how it’s managed and accounted for can truly determine the health of the company.

When a business owner realizes he or she needs to loosen the financial reins and have some help, that sometimes means a family member or existing trusted employee is given the responsibility for bookkeeping, which may equate to data entry on a spreadsheet. Maybe down the road the company invests in a bookkeeping system and hires a well-qualified bookkeeper. But at some point, as the company grows, the need for a controller may be realized. Sometimes this realization comes because you find that your financial statements are incomplete or nonexistent, you don’t know exactly where you stand financially, or you experience a crisis as was the case with my client.

Maybe it’s best to consider hiring a controller sooner than later. Whether a controller is right for your business will be determined by several factors including your industry, the size of your company, and how it’s structured. Following are some indications that it may be time to hire a controller:

• You lack accurate and timely information on the financial condition of your company

• You are spending too much time on accounting functions when you need to be focusing on developing your business
• You need to ensure you are in full tax compliance – state, local and federal
• Your company increases in complexity in ways such as adding lines of business or opening additional sites

• Your company is growing rapidly and there is uncertainty about the financial consequences of business considerations such as buying a new facility or exploring a new stream of revenue

• You have large amounts of inventory and receivables that need to be managed with both an accounts payable and accounts receivable person, respectively
• You have stockholders or a board of directors who aren’t close associates or family members

Hiring a controller is a sound business practice that protects your company and its assets. A controller provides accounting staff supervision, tactical financial management, and financial reporting so that you always know where you stand financially. If you have no CFO, a controller may work with the business owner to develop financial strategy, policies and procedures. In addition…

• With the ability to not only generate data but interpret it, a controller is well equipped to demonstrate how changes have occurred over time and to aid in decision making as you move forward.
• With an in-depth understanding of the financial situation, both from a big picture perspective and in minute detail, he or she can make recommendations that will position the company to lower expenses, save money, use capital, streamline operations, and maximize profits.
• A controller can cast a financial safety net by mitigating risks with appropriate insurance coverage, inventory management, diversification, and fiscal threat assessments.
• You’ll have the confidence that you’re in compliance and maximizing savings where taxes are concerned.

Business owners typically find that hiring a controller – whether full or part-time, employee or contractor – results in a net gain for the company. Just as important, it frees the business owner to focus on developing and growing the company, armed with the financial tools needed to avoid pitfalls and optimize opportunities. And, of course, having your financials in order and working to maximize the value of your company is essential to a successful exit.

As my client noted, “If we’d known then what we know now, we could have increased profitability by ten percent. If I’d hired a controller five or six years ago, we would be light years ahead. We wouldn’t be looking to grow like we are now without him.”