What Is a Fractional Controller? Does My Business Need One?

 
Growing businesses often run into a Catch-22 when it comes to hiring—they lack the funds to hire on a full-time basis but cannot scale without someone taking on the role.
 
For example, many small business owners could tangibly benefit from the services of a financial controller. But few can afford to hire one in-house.
 
In the past, there was no easy fix for this problem. You simply made it work with the resources you had and hoped to one day reach the point where you could hire a professional controller. 
 
But, today, the rise of the outsourced business model has changed that, making it possible to hire a fractional controller at a much earlier stage in your business maturity.
 

What Is a Fractional Controller?

 
So, what is a fractional controller?
 
A financial controller is a senior-level executive who acts as the head of the accounting department. Their job is to manage accounting teams, ensure that the books are in proper order, and report directly to the CFO. If a company does not yet have a CFO, the right controller can take the helm of financial planning and analysis.  
 
As the name suggests, a fractional controller handles all the duties of a full-time controller, except they do so remotely on a part-time or as-needed basis. 
 
Over the years, the role of controller has evolved in scope and responsibility. While overseeing financial compilation and reporting remains the primary responsibilities, there are several others they may also be tasked with, including: 
 

• Building and managing budgets
• Conducting financial forecasting
• Coordinating and reconciling audits 
• Designing financial processes and controls  
• Ensuring tax compliance 
• Maintaining the general ledger, payroll, and taxes
• Managing the finance and accounting teams 
• Preparing financial statements 
• Providing financial and accounting insights  
• Setting financial KPIs 
• Staying up to date with industry-specific regulation and compliance requirements 
• Tracking revenue inflows and outflows

 
As a high-level supervisor, their role goes far beyond data entry and basic accounting tasks. They make sure that all accounting processes are done properly—that means fast, accurate, and efficient. 
 

Does My Business Need a Fractional Controller? 

 
Are you wondering whether a fractional controller will be right for your business? 
 
Here are some questions to ask and reasons to consider before you hire: 
 

What Is Your Level of Business Maturity?   

 
Ultimately, the debate starts and ends with a simple question: will the fractional controller provide enough value to justify hiring them?  
 
You probably do not have enough work to employ a full-time controller. Most businesses will not hire one in-house until they reach the $10 million revenue mark. But a part-time controller model accelerates the hiring process, allowing a company to benefit from their services at a much earlier point. 
 
As we have discussed previously, in most cases, the earliest stage a company will hire a part-time controller is between the $500,000 to $1,000,000 revenue mark. So, if you have reached that level of maturity, then there are likely plenty of complex accounting tasks they could immediately take on to drive value. 
 

Are You Required to Adhere to GAAP? 

 
Generally Accepted Accounting Principles (GAAP) are a set of rules that serve as the foundation for business accounting methods and processes. They have become the standard practice for the U.S. Securities and Exchange Commission (SEC). As such, publicly traded and regulated companies are expected to practice GAAP. 
 
Even if you are not yet legally required to abide by GAAP, doing so is important since it can help you:
 

• Avoid fraud
• Gauge your company’s financial health
• Identify areas for optimization
• Raise money from investors or lenders who require GAAP 

 
A part-time financial controller can guide your organization as it adopts and applies the 10 GAAP principles. 
 

Do You Need Bookkeeper Supervision? 

 
Do you lack the time or know-how to monitor the business’ bookkeeping activities? Are problems within your existing accounting department building up? 
 
Even if you have an accounting team running, they may not be organized and managed as efficiently as you would like. 
 
A part-time financial controller can attend to the company’s daily financial minutiae. In that supervisory booking role, they can not only ensure that books are done in a timely and accurate manner, but also implement department-wide accounting tactics that will further optimize internal processes—making them faster, more accurate, and more reliable.   
 
If the books are inaccurate, a financial controller can analyze the data to identify the root cause or develop a solution to correct the problem. 
 

Are You Being Audited?  

 
Audits are an unfortunate reality of doing business. You may not like them, but you had better be prepared for them. 
 
A part-time financial controller can take some of the stress out of an audit. 
 
One of their daily duties is to ensure compliance with federal, state, and local government reporting requirements and tax filings. They will take charge of conducting internal audits and provide the expert support you need during an external audit. 
 

Does Your CFO Need Support?   

 
Have you hired a full-time or fractional CFO? 
 
If so, hiring a fractional controller to act as their counterpart could split up the workload and add further internal efficiencies to your financial and accounting departments. This would allow the CFO to focus on financial forecasting and analysis and the controller to focus on keeping the accounting team performing at peak efficiency.