When to add a controller

A bookkeeper records transactions and keeps the books current. A controller owns the accuracy of the financial statements and the process that produces them. That means the monthly close, accounting policies, review of the bookkeeper's work, internal controls, audits and reviews, and the schedules a lender or investor asks for.

A CFO looks forward: cash, financing, pricing, and strategy. A controller looks at whether the numbers behind all that are right. Small companies often have neither and rely on a bookkeeper and an outside accountant, which works for a while.

Revenue by itself is a weak signal. A company with $5 million of simple sales can do fine with a good bookkeeper, and one with $2 million and several revenue types may not. Look for these instead.

A 40-person services company grew quickly. Its bookkeeper, who is excellent, enters vendor bills, approves them with the owner's blanket permission, and sends the payments. Revenue is recognized when invoices go out, even though several contracts bill a year in advance. The close runs three weeks, and the owner learned of a cash shortfall in the middle of a month.

The first fix is not a hire. It is separating the duties so that someone other than the person who enters a bill approves it, and writing down the month-end steps. The second is a reviewer who knows how to treat the advance billings. That reviewer is a controller, and the role might be a few days a month at first.

A full-time controller is one option and a significant cost. Others are cheaper and often enough. An outsourced or fractional controller works a set number of hours a month, reviews the close, and sets up the policies. An accounting firm can take on the same role as part of a monthly engagement. A senior bookkeeper with review support from an outside CPA covers a surprising amount.

Match the arrangement to the problem. If the problem is review and structure, part-time works. If the problem is volume, such as many entities or a lot of daily transactions, full-time starts to make sense.

Before hiring, write down what you want in the first ninety days: a faster close, a documented set of policies, a clean reconciliation of every balance sheet account, and a reporting package the owner reads. Hire for the gap. Someone with an audit background is strong at controls and policies. Someone who has run a close at a growing company is strong at process.

Check how they work with the existing bookkeeper. The best controllers raise the standard of the people around them and leave the day-to-day transactions where they are.