How can a financial controller add value?

The role of a financial controller goes way beyond just reporting the financial performance of a business. They really play a vital role not just in the finance department but also to the entire business. They are the CFO/FDs right hand person. This article will discuss the exact role of the financial controller and specifically show how a financial controller can add value to a business.


The role of a financial controller:

The day to day role of a financial controller is to report the performance of the company to the managers and executives. The reason this is so important is because without knowing how the business is performing the executives will never so if they need to improve. But beyond simply reporting on the performance data, the financial controller also needs to ensure they are reporting where the company is making and losing money. For example, there may be certain products which are losing money but others that are making a lot of money. For more on this please see the subheading on data analysis below.


Deeply involved in the business’ strategy

The first and most important task of the financial controller is their involvement in business strategy. The directors need to know the financial implications of their proposed strategy decisions. For example, they may be considering opening up a new factory or extending a product line. All these decisions will have huge financial implications on the business in terms of costs, sales and cash. The financial controller will model the financial implications under different scenarios, they will also help the directors understand what certain financial things mean in the model in plain English. All this will help the directors make better informed financial decisions.



Analysing info

Probably the second most important business task of the financial controller is to analyse the financial information that they are reporting on. It is one thing to report information, but analysing it for insights is something completely different. If we take an example we looked at earlier, if certain products are not profitable then this may not mean necessarily that those products need to be removed from the product line. The financial controller may for example analyse this data with profitability by the customer as well. Perhaps this will show that actually, the most profitable customers all buy this low-profit or loss-making product. This example shows what is called a “loss-leader” product, meaning that the business needs to sell a loss-making product because its customers buy it along with lots of other very profitable products, without it they would significantly reduce their spending. This is just one example, but it shows how important the financial controller’s task of analysing data in depth is so important, rather than just taking data at face value.


Provide performance to other departments in the business

The financial controller can provide a huge amount of value to the other departments in a business. Perhaps the best examples of this are the Sales/Marketing and Operations departments. Firstly the financial controller should be in charge of the business’ IT systems. This is not suggesting they replace the IT department in the technical functioning of the business’ IT, rather they are the ones who need to ensure reporting from all software across all departments is available. Reporting can be both financial and non-financial data.

Examples of how a financial controller can help other departments: efficiency data for operations, stock data for the production line, help on pricing and mark ups for sales, transactional values for marketing. Essentially anything which is to do with reporting has the financial controller at the centre. You can see now how valuable a financial controller is to a business.

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The financial controller enables the business to set proper pricing strategies. They are the ones analysing profit by product/customer/marketing channel/location. This means they are best placed to determine how the products/services should be priced. Of course, they are not the only ones making these decisions, they should always work with the marketing department to do this, but they are a vital part of the role.


Ensure the are no errors in the financial information and work with the external accountant at the year-end

It goes without saying that the financial controller is absolutely essential in ensuring the financial data of the company is accurate. This is true in terms of tax obligations such as VAT, Corporation Tax, PAYE, Pensions. They need to make sure payroll is correct, staff are paid on time, suppliers are paid. They are in control of debtor management, reconciling the bank, and ensuring the consolidation of group accounts are conducted properly. They then collaborate with the company’s external accountant to ensure the year-end accounts and books are up to date, accurate and abide by accounting standards.