How to hire a top-notch controller

In our previous blog post, we covered the 4 key steps to choosing an ERP vendor. Now we'll dive into the first step: Hiring a top-notch controller. Here's why we recommend starting with this hire and how to find the right one for your business.

Once you realize that your growing company is ready to upgrade its finance function from spreadsheets and QuickBooks to an ERP system, the next step is to assemble the right team—and the right person to lead that team. Since ERP software supports foundational processes as accounting, budgeting, and payroll, an ERP solution will probably have the most impact on your finance department. That’s why many organizations enlist a senior finance executive to oversee the ERP implementation process.

Many companies turn to their controllers to lead ERP projects because they're also responsible for making decisions about new technology for the finance team. If you’re still outsourcing your bookkeeping and accounting to an outside firm, the decision to transition to an ERP system may be the tipping point to bring a controller on as the first step in the evaluation, selection, and implementation process. Here’s why.

What is a controller?

First, let’s define what a controller is. Sometimes called a comptroller, this management role can seem very similar to a CFO, and at smaller companies, a controller rather than a CFO may run the finance department. In larger companies, the controller may report to the CFO.

Controllers are responsible for most financial and accounting decisions in the finance department. Their work involves gaining insights into the financial picture through reporting and analysis, and they help interpret reports and finances to other executives and to the company. They’re experts in GAAP (generally accepted accounting principles), financial analysis, and risk management.

The controller often oversees the financial team, including financial managers, payroll and tax managers, accounts payable and accounts receivables managers, accountants, and credit analysts.

Choosing between a controller and an outsourced accountant

Startups and small businesses often outsource their accounting and bookkeeping operations at first. Doing so can help these small businesses focus on their mission or scale while someone else takes care of back-office operations. An outsourced accountant or bookkeeper can help prepare monthly financial statements, paying vendors and employees, and create reports for investors and boards.

However, as your business grows, you’ll probably need more expertise, and at that point, it makes sense to bring the function in-house. Most controllers start out in bookkeeping, then build on those skills, so they can manage both in-house and outsourced accountants. Controllers can help develop processes and policies, perform in-depth analysis, set up and monitor internal controls, and help build your finance department.

If you don’t have a CFO yet, a controller will be responsible for delivering regular, timely GAAP-compliant financial statements. That’s not generally something a bookkeeper will or should do. In fact, one of the biggest reasons for hiring an in-house controller is to have very tight control over your financial close, and your finances in general.

The best time to hire a controller

When it comes to building a finance department, every company will reach a different inflection point that depends on their business model and volume of transactions. As your business grows, you’ll eventually reach the point where you no longer have the time to review invoices or other financial transactions. Even if you already have a CFO, as your finances become more complex, you may want to hire a controller to handle reporting, audit compliance, and data tracking.

“The controller gives you a second set of eyes to control and monitor spending,” says David Smooha, CEO of Business Solution Partners. “They give you the pulse of your business at any given time.”

Often, the decision to hire a controller comes down to cost, when you realize that you’re spending hundreds of thousands of dollars on outsourced accountants, and bringing the function in house will save you money.

One sign you’ve reached that point is what Justin McLoughlin of airCFO calls “the two-thirds rule”:  if you’re spending two-thirds of a controller’s salary on a contractor or third-party service, it’s time to hire someone full-time. For example, if the average controller’s salary is $10,000 per month, you shouldn’t be spending more than $6,700 on outsourcing that function.

Another indicator is compliance. Companies in heavily regulated industries should hire controllers early, because these professionals have the skills to keep close tabs on compliance and accuracy.

Why you need a controller before you select an ERP

One of a controller’s many responsibilities is evaluating new technology that will help the finance team do their jobs more efficiently. An ERP system certainly falls into that category.

Many finance leaders highly recommend hiring a controller and other important finance team members before beginning an ERP implementation project, and certainly before selecting an ERP system. The controller can lead project team members in scoping out the specifics of your desired solution, including any integrations and important configurations.

“I would absolutely want my in-house team onboard first because then they can be part of the decision-making process,” says Chris Cahill, CFO at Barrington Media Group. “They’re going to be the people driving this bus after it’s set up, so you want them to be part of the decision-making on the front end, before you hire consultants. You don’t want your in-house team having to go back and fix business processes later.”

The controller’s role in leading an ERP implementation

Because ERP software supports primary business processes such as accounting and budgeting, it may make sense to have your controller act as the implementation team’s executive sponsor or project manager. Controllers can oversee the development of top-level goals, requirements, and key performance indicators (KPIs), and keep an eye on the timeline. They can also help evaluate existing systems, workflows, and processes, which will be helpful when deciding when to go live with ERP modules for areas like inventory, manufacturing, or customer relationship management (CRM).

And it goes without saying that they should be the new system’s main cheerleader.

The controller can also play a supporting role in an ERP implementation plan. They can work with consultants to mine data from legacy systems and databases, help with custom reporting and layouts for financial statements, and assist with designing custom workflows.

“Look for controllers that have the right skill set and background to confidently roll out an ERP, because there's a lot that can go wrong,” says Cahill. “Things are going to go sideways, like that ship in the Suez Canal, and you need someone who can keep the implementation moving forward.”

Post-implementation: What systems ensure success?

A successful ERP implementation doesn’t end on your go-live date. Your controller can help make sure that your company continues to reap the benefits of your new ERP system after deployment, tweaking the system as necessary and allocating resources for training, support, and updates.

You may also want to integrate your ERP with other solutions that automate key processes. For example, a secure invoice and bill payment platform like Routable can speed business payments. A top-notch controller will look at the ERP implementation as a springboard to further improvements.

“A selling point of an ERP implementation is that the business is going to gain efficiency through automation,” says  Cahill. “The controller must be 100 percent all-in on that concept, it's the wave of the future.”

Up next: How to identify your ERP requirements >