In large companies, the hierarchy within the finance department consists of the CFO, one or more controllers and several bookkeepers. In smaller companies, these functions get collapsed under fewer people. For small businesses, the function of CFO is usually played by the CEO. Bookkeeping is done by an in-house bookkeeper or outsourced to a contractor or an outside firm. The fuzzy part is usually the function of the controller. Who plays that role in a small business?

Let’s first quickly define the respective roles in the context of a small business. The roles of the bookkeeper and the CFO are usually well understood. The bookkeeper’s role is very tactical and consists of keeping the books up-to-date. The CFO’s role is much more strategic and entails forecasting, budgeting, managing the capital structure and communicating with investors and lenders. The controller role is what’s in between these two extremes.

The controller remains quite tactical. The controller won’t make long range strategic decisions. However, the controller operates a lot more in the subjective range than the bookkeeper. Whereas the bookkeeper’s responsibilities are very black and white (record this transaction here, reconcile that account, enter this bill,…), the controller needs to make day-to-day decisions to manage cash flow (which vendors will we pay today? will we have enough cash to cut payroll next week?).

So, who should play that controller role in a small business? Most small business can’t afford to have a dedicated controller on staff. This function needs to assigned to someone who already has another role. Typical options include the following: